While the near-term oil production outlook is somewhat uncertain, there are projects capable of halting the recent decline and delivering modest volume growth over the medium-to-long term. Meanwhile, more efficient usage of associated gas, through the limitation of flaring and the development of domestic resources, offers prospects for sustainable growth in the upstream gas segment, with potential output available for domestic use, power generation and eventually for export as liquefied natural gas.
The main trends and developments we highlight for Cameroon's oil and gas sector are as follows:
- BMI expects growth in oil production to be somewhat irregular over the next decade with output of an estimated 61,700 barrels per day (b/d) in 2012, peaking at 98,800b/d in 2020 before falling back . This uncertain growth outlook is based on a small number of modest new projects capable of offsetting only temporarily the underlying decline of older fields.
- The Cameroon government has assumed that domestic oil production will average nearly 79,000b/d in 2013. UK-based energy firm Bowleven announced in October 2012 that oil production at its Etinde project in Cameroon is likely to begin in 2015 rather than 2013, as was previously stated.
- Meanwhile, consumption of crude is likely to steadily increase from 2012 to 2022. We therefore anticipate that consumption will rise from an estimated 37,500b/d in 2012, to hit above 60,000b/d by 2021.
- BMI forecasts that gas production will increase from 0.24bn cubic metres (bcm) in 2012 to 3.3bcm by 2022, as the country reduces the practice of flaring and start monetising associated gas resources. Gas production is to be boosted further by new projects, such as the Victoria Oil and Gas Logbaba scheme. Gas output growth provides export prospects, notably in the form of LNG as suggested by the proposed 4.83bcm liquefied natural gas (LNG) terminal in Kribi.
- Bowleven has applied formally to the government for permission to start extracting gas. The company has moved forward with a final investment decision in March 2013, with the first gas from the MLHP-7 block on the Etinde permit expected to be produced in 2016.
- Gas demand is set to rise steeply on the back of numerous infrastructure projects that will boost domestic consumption. The most notable of these projects is the 150 megawatt (MW) Kribi power plant. As a result, we see gas consumption rising from 0.2bcm in 2012 to 0.8bcm by 2020.
- In the downstream sector, the government has ambitious plans to expand capacity at Societe Nationale de Raffinage (SONARA), the country's only refinery located in Cape Limboh, from 42,200b/d to 70,300b/d; and to upgrade the facility so that it will be able to process the heavy crude oil that is produced in Cameroon, and not simply imported light grades.
- The government has entered into a memorandum of understanding (MoU) with US-based International Refinery Consultants (IRC) to build a new oil refinery in the country. The IRC will conduct extensive studies for building the high-capacity Cameroon Atlantic Refinery Project in Kribi. Initially, the refinery will produce at least 200,000b/d of oil and could be expanded to 350,000b/d in the next few years.
Cameroon's dependence on oil prices leads to high volatility in the country's export revenues. Our assumptions of tight supply due to booming demand in emerging markets is clearly an opportunity for the country. As a result, we forecast OPEC basket oil prices to remain elevated and average US$104.4 per barrel (bbl) in 2013, a figure slightly lower than the 2012 average of US$109.5/bbl.