The majority of Gabon’s crude output is low sulfur, but it also produces a decent yield of both middle distillates and fuel oil, giving it a wider customer base.
The fifth-largest oil producer in sub-Saharan Africa, Gabon has been hit hard by falling oil prices, with oil accounting for about half of government revenues and 80% of national exports.

These low oil prices have also coincided with a decline in Gabonese production, which fallen in the past two years due to maturing fields and turbulent industrial relations.
Oil production this year has averaged 210,000-230,000 b/d and is expected to stay below last year’s 236,000 b/d, according to Platts estimates.

Production reached a peak of 365,000 b/d in 1996 but has since steadily declined, according to BP’s Statistical Review of World Energy 2015. It was down by almost 14% between 2003 and 2014, mainly due to the maturing fields and to the lack of any new oil projects over the past decade.

The country’s powerful L’Organisation Nationale des Employes du Petrole union has longstanding difficulties with the government on employment terms and it is quite common for strikes to take place, hurting output.

The strikes in Gabon’s oil industry, in April this year and December 2014, hit almost 10% of its production. In February 2013, a four-day strike shut all of Gabon’s then 240,000 b/d production.

But there are expectations that output could rise in the next decade.
In October 2014, Gabon awarded 13 blocks to 11 companies in a deepwater licensing round, but exploration progress has been very slow.

Last year, Gabon’s oil minister, Etienne Ngoubou, had said he was hoping production would increase to 300,000 b/d in 2018 and then to 500,000 b/d in 2024. But production for this year remains below last year’s levels.

POPULARITY INCREASES

Apart from the technical allure of Gabonese crude, it is also cheap, regularly trading at a steep discount to Dated Brent. This compares with light sweet Nigerian crude, which trades at a significant premium.

Heavy and medium sweet crudes have been in strong demand from global refineries in the past few years, especially from complex refiners as they can refine heavier crudes which are cheaper and still produce a good amount of middle distillates giving them with better margins.

Gabon exports six main crude grades. The two medium sweet flagships are Rabi Blend and Rabi Light and make almost half of the country’s exports. Other export grades include Oguendjo, Lucina, Etame and Mandji, also medium-to-heavy sweet grades that attract a broad set of buyers.

Some of Gabon’s biggest customers now include Trinidad and Tobago, Malaysia, Singapore, Japan, South Korea, Spain and France, with demand from these countries increasing steadily over the past few years.

Gabon has also become the sixth-largest supplier of oil to Australia which imported 31,249 b/d of Gabonese crude in the fiscal year ending June 30, according to recent data from the Australian Bureau of Statistics. This accounts for almost 15% of total Gabon crude exports, according to Platts estimates.

Malaysia has also emerged as a significant buyer of Gabonese crude.
It imported 89,254 b/d of crude from Gabon between January and May, up 89% from a year earlier, Malaysian Department of Statistics data shows.
Australia and Malaysia produce mainly light sweet crude and their imports are medium-to-heavy sweet crudes, Gabon’s principal grades.

Japan and South Korea have also increased imports from Gabon, and elsewhere in West Africa, and as they seek to diversify sourcing away from the Middle East to take advantage of low prices and government incentives to boost non-Middle Eastern imports.

US SHARPLY CUTS BACK

In 2013, South Korea only imported 1.31 million barrels (3,589 b/d) of crude from Gabon, according to Korean government data. But in 2014, imports surged to 5.83 million barrels (15,973 b/d). In the seven months ending August 31, South Korea bought 4.22 million barrels (20,000 b/d) of crude from Gabon.

Regular demand from Spain, Singapore and France means the monthly Gabonese crude export program tends to sell faster than those in Nigeria, Equatorial Guinea and Angola.
The US used to be Gabon’s main export destination before the shale boom hit demand.
The US started importing Gabonese crude only in the early-1990s. But by 1995, it imported 229,000 b/d of Gabonese crude, according to US Energy Information Administration data, almost 63% of total Gabonese output at the time.
From 2000 to 2005, US imports of Gabonese crude averaged around 138,000 b/d. But last year the US only imported 16,000 b/d, its lowest-ever volume.
Unlike Nigeria, Gabon has found it somewhat easier to find new buyers for its crude in the past decade because of its specifications.

Source: Platts