Background
Gabon is led by Africa�s longest-serving head of state, President Omar Bongo.

Gabon�s real GDP growth is forecast at 2.2 percent for 2005 and 2.5 percent in 2006. Political stability and ample natural resources were the leading factors contributing to Gabon�s $5,900 per-capita gross domestic product (GDP) in 2004, which is approximately four times the average of sub-Saharan African nations. However, nearly half of the population lives below the poverty line. High oil prices have also helped raise 2005 GDP growth in Gabon. Exports of crude oil account for approximately 60 percent of the government�s budget and more than 40 percent of GDP. However, oil exports are expected to decline in coming years as a result of decreased domestic oil production.

In addition to declining oil production, Gabon is faced with high external debt amounting to nearly 70 percent of GDP. In 1998, the International Monetary Fund (IMF) introduced a structural reform plan and the African Development Bank (AfDB) loaned Gabon $14.7 million to encourage privatization of state-owned businesses. Although the IMF allowed a Gabonese line of credit to collapse in 2002, IMF support helped Gabon achieve a debt-rescheduling agreement of $862 million with the Paris Club of international creditors, which was due in June 2005.

Gabon was instrumental in forming the Central Africa Economic and Monetary Community (CEMAC), a consortium of six nations hoping to merge their macroeconomic policies and create a common market. The movement culminated in the creation of the Gulf of Guinea Commission, established in 2000 to encourage settlement of conflicts threatening natural resource development.

Oil
Gabon is sub-Saharan Africa�s fifth largest producer of crude oil.

According to The Oil and Gas Journal (OGJ), Gabon had proven oil reserves of 2.5 billion barrels as of January 2005. Gabon is sub-Saharan Africa�s fifth largest producer of crude oil (behind Nigeria, Angola, Sudan and Equatorial Guinea ) at approximately 233,000 barrels per day (bbl/d). Contrasted with Gabon�s 1997 peak of 371,000 bbl/d, 2005 oil production has declined 37 percent. Gabon�s forecasted oil consumption in 2005 is 10,700 bbl/d, with net oil exports of approximately 222,300 bbl/d. Gabon is also the fifth largest exporter of crude oil behind the four countries listed above, with over half of crude oil exports (126,000 bbl/d) going to the United States. The remaining exports go to Western Europe and Asia.

Sector Organization
Gabon�s Oil Ministry is responsible for all regulation in the oil industry. French companies are the primary foreign investors in Gabon, with Total Gabon -- a French subsidiary of Total -- being the largest oil producer. Gabon Shell, a subsidiary of Royal Dutch Shell, operates the country�s largest oil field, Rabi Kounga. The tax system within Gabon encourages foreign investment and certain aspects of oil exploration are exempt from the value-added tax. Gabon�s Oil Ministry is planning to revise its petroleum law in early 2006, by adding additional incentives for frontier oil exploration.

In addition to the investment incentives, Gabon has been striving towards greater transparency within the oil industry. In February 2004, Gabon created an online oil databank where users can obtain energy information dating back thirty years. Government officials anticipate that the databank will lead to greater transparency in the oil sector. In May 2004, Gabon joined Tony Blair�s Extractive Industries Transparency Initiative (EITI) to increase transparency in oil and mining payments from companies to governments. Gabon is hopeful that such measures will increase investment in the oil and mining industries.

Exploration and Production
Gabon�s largest oil field, Shell�s offshore Rabi-Kounga, produces around 55,000 bbl/d, down from its 1997 peak of 217,000 bbl/d. In 2003, in an effort to extend the productive life of the field, Shell began re-injecting associated gas into the field. In addition, Shell and Elf-Gabon (a joint venture between Total, and the Gabonese government) announced a ten-year, $152 million extension of an existing exploration and production-sharing agreement (PSA) in the Rabi-Kounga area. With the extension, the exploration and PSA will continue through 2017.

While Shell and Total are the only large oil firms active in Gabon, several smaller firms have brought oil fields online in recent years. PanOcean, Vaalco, and Sasol are involved in the Etame offshore field. As of August 2005, total output at Etame field was approximately 25,000 bbl/d. In April 2002, Vaalco received a $10 million investment from the International Finance Corporation (IFC) for its work on Etame. In the summer of 2005, IFC approved a second revolving loan of $30 million for Vaalco to continue its oil exploration, development and production in the Etame block. In October 2004, Sasol announced a production increase at Etame from 15,000 bbl/d - 22,000 bbl/d due to the addition of a new horizontal well.

Other fields in Gabon include Atora (Total), the Tchatamba fields (Marathon), Etame (Vaalco), Toucan (Shell), Olowi (Pioneer), and Pelican, Lucina and Niungo (Perenco). The Atora onshore field, with an estimated 100 million barrels of reserves, is currently producing 20,000 bbl/d. Shell-Gabon holds PSAs for the Douka Marin and Panga Marin blocks. Pioneer Natural Resource Company has a PSA covering the Olowi block, three miles south of Gabon�s Gamba oil field. Energy Africa (purchased in May 2004 by Ireland�s Tullow Oil) signed a PSA in April 2002 to operate in the area covered by the Akoum permit.

In an effort to increase production, Gabon�s Oil Ministry has increased the number of exploration permits offered to investors. During the April 2000 - January 2001 licensing round, Gabon offered 27 blocks, but response from international petroleum companies was disappointing. The government then decided to focus on smaller independent firms and Chinese companies. The newest licensing round, planned for late 2006, will focus on Gabon�s unexplored deep and ultra-deep waters.

Some of the most recent oil discoveries in Gabon have been by Maurel and Prom, a French oil company, which announced its first successful well in May 2005. In December 2004, the company acquired four exploration permits in partnership with South African, Rockover Oil and Gas. In addition, the company plans to drill two additional wells in the Ofoubou permit area.

In February 2005, Shell and PanOcean announced positive results from the Koula well, located in the Awoun permit in south-east Gabon. The companies share 50 percent ownership in the permit area and are currently deciding the feasibility of developing the well.

Refining
The Sogara refinery at Port Gentil is Gabon�s only refinery. Opened in 1967, Sogara is jointly owned by the Gabonese government (25 percent) and a number of international firms, led by Total (44 percent) and Shell (17 percent). The refinery operates at 82 percent (17,300 bbl/d) of its 21,000 bbl/d nameplate capacity.

Natural Gas
Natural gas is a relatively unexploited natural resource in Gabon.

Gabon has natural gas reserves of 1.2 trillion cubic feet (Tcf). The majority of natural gas output is used in the generation of electricity and to run the country�s single refinery. In 2004, the Gabonese government awarded Total Gabon the country�s first natural gas exploration license under a PSA. The exploration area is located between the capital, Libreville, and Port Gentil. Any natural gas discovered will be used to enhance oilfield performance, or for electricity production at Port Gentil.

Electricity
Gabon �s Soci�t� d'Electricit� et d�Eaux du Gabon (SEEG) continues to improve the countries generation capacity and distribution network.

As of January 2003, Gabon had 400 megawatts (MW) of installed generating capacity, of which 59 percent was conventional thermal, the remainder consisting of hydroelectric. In 2003, the county generated 1.5 billion kilowatt hours (Bkwh) of electricity, while consuming 1.4 Bkwh. The Nice Port station with 59 MW and Owendo with 44 MW are the major suppliers of oil-fired thermal electricity to Gabon. The primary hydroelectric sites are located at Tchimbele and Kinguele on the M�Bei River. Gabon has approximately 6,000 MW of undeveloped hydroelectric potential.

Sector Organization
Gabon�s electricity sector is operated by the Soci�t� d'Electricit� et d�Eaux du Gabon (SEEG). Since 1997, Vivendi has owned 51 percent of SEEG. The remaining shares of SEEG are owned by SEEG employees and the public. Electricity rates have fallen since Vivendi led efforts to improve the country�s generating capacity and its transmission/distribution network.

Almost half of the Gabonese population is connected to the national grid. SEEG supplies electricity to approximately 520,000 people in Gabon, primarily in the cities of Libreville, Port Gentil and Franceville. A current investment venture proposes improving the quality of supply and extending electricity to other areas of the country.