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ReportNo. 6915-C;A Gabon:Issues and'Options in the Energy-Sector Public Disclosure Authorized July1988 .o 29> ' "' 'O Public Disclosure Authorized Public Disclosure Authorized r. Jg, H}/1'' > ; is Public Disclosure Authorized JOINT URDPIVORLDBANK 8ENEGY SCWTOR ASSESSN3NT PROGANM ReportsAlready Issued Country Date Npmber Indonesia November1981 3543 JD Mauritius December1981 3510-MAS Kenya May 1982 3800-KE Sri Lanka May 1982 3792-CE Zimbabwe June 1482 3765-ZIM Haiti June 1982 3672-BA Papua New Guinea June 1982 3882-PNG Burundi June 1982 3778-BU Rwanda June 1982 3779-RW Malawi August1982 3903-MAL Bangladesh October1982 3873-BD Zambia January1983 4110-ZA Turkey March 1983 3877-TU Bolivia April 1983 4213-BO Fiji June 1983 4462-FIJ SolomonIslands. June 1983 4404-SOL Senegal July 1983 4182-SE Sudan July 1983 4511-SU Uganda July 1983 4453-UC Nigeria August1983 4440-UNI Nepal August1983 4474-NEP The Gambia November1983 4743-CM Peru January1984 4677-PE CostaRica January1984 4655-CR Lesotho January1984 4676-LSO Seychelles January1984 - 4693-SEY Morocco March 1984 4157-MOR Portugal April 1984 4824-PO Niger May 1984 4642-NIR Ethiopia July 1984 4741-ET Cape Verde August 1984 5073-CV GuineaBissau August 1984 5083-GUB Botswana September1984 4998-BT St. Vincentand the Grenadines September1984 5103-STV St. Lucia September1984 5111-SLU Paraguay October1984 5145-PA Tanzania November1984 4969-TA YemenArab Republic December1984 4892-YAR Liberia December1984 5279-LBR IslamicRepublic of Mauritania April 1985 5224-MAU Jamaica April 1985 5466-JM C8te d'Ivoire April 1985 5250-IVC Benin June 1985 5222-BEN Continuedon insideback cover FOR OFFICIAL USE Report No. 6915-CA GABON ISSUES AND OPTIONSIN THE ENERGYSECTOR JULY 1988 This is one of a series of reportsof the Joint UNDP/World Bank Energy SectorAssessment Program. Financefor this work has been provided,in part, by the UNDP Energy Account,and the work has been carriedout by the World Bank. This reporthas a restricteddistribution. Its contents may not be disclosedwithout authorization from the Government,the UNDP or the Vorld Bank. 3 Gabon possesses significant petroleum, natural gas, hydroelectricand forestryresourceso. The commercialenergy consumption per capita (600 kgoe in 1985) is high comparedto other countriesof Sub- SaharanAfrica. The missionpreliminary estimates of the total fuelwood consumptionper capitawas about 390 kgoe, making the total per capita energyconsumption per capitain 1985 990 kgoe. The mission reviewedenergy sector developmentand investment plans followingthe drop in 1986 in internationaloil prices. As agreed with the government,the presentreport focusesmainly on petroleumand electricity subsectors which were the most affected by oil price decline. Utilizationof natural gas has also become' priorityissue since the discoveryof large resources. The reportaddresses other issuesand evaluatesoptions related to (a) optimizationof oil productionso as to sustaineconomic recovery; (b) a restrictedpower investmentplan; and (c) developmentof coherent pricing policies to promote efficientenergy supply and consumption. Finally,it recommendsinstitutional reforms pertaining to energy sector planning,management and coordination. BEICIP Bureaud'8tudes Industrielles et de Cooperationde l'institutfrangais du p6trole COGER Compagnie Gabon Elf de Raffinage DG8 Directorate General of Energy DCH Directorate General of Hydrocarbons GPP GroupementProfessionnel des Pktrolidrs IMP InternationalMonetary Fund MEER Ministryof Energyand HydraulicResources- - MHBP Ministryof Pinance,Budget and Participations MMH Ministry of Mines and Hydrocarbons MPg Ministry of Planning and Economy OPEC Organisationof PetroleumExporting Countries Petrogeb Soci4teNationale P6troli4re Gabwaaise 8ggG Soci6t6d'Energie et d'Eau du Cabon SGEPP Soci6t6Gabonaise d'Entreposage des Produits p6troliers SNgA Soci6t6Nationale Elf Aquitaine SOBRAGA Soci6t6des brasseriestu Gabon SOGARA Soci6t6 Cabonaise de Raffinage SPA!E Societedes P6troles 4e l'AfriqueEquatoriale UNDP UnitedNations Development Programme bbl barrel b/d barrel(s) per day bly barrels(s) per year BSCV billion standard cubic feet BTU British Thermal Unit CIP cost, insurance, freight DER Directorate of Regional Exploitations PCV Franceville GOP gross domestic product GWh gigawatt-hour ha hectare hi hectoliter RV high voltage kcal kilocalorie kg kilogram kgoe kilograms of oil equivalent km kilometer km' square kilometer ktoo thousands tons of oil equivalent kVA kilovolt-ampere kY kilovolt kV kilowatt kWh kilowatt-hour 1 liter LIV Libreville LPC liquefied petroleum gas LV low voltage m meter 23 cubic meter NCP thousand cubic feet NHBTU million British Thermal Units WYA megavolt-ampere NV medium voltage M3 megawatt jjm3 nortal cubic meter MR! Northwest Europe POC Port-Gentil toe tons of oil equivalent ton metric ton yr year aURUC AMFD EQUnIVALUS Currency Unit - CPA Franc (CFAF) Lichange PAte: 350 CFAF/US$1 a/ Fuel CalorificVelue too (millionkcal/ton) CrudeOil 10.2 1 LPB (Butaer) 10.8 1.059 Gasollne 10.5 1.029 Jet Fuel 10.4 1.020 Kweosene 10.3 1.007 Gas ol1 10,2 1 Fuel 011 9.7 0.951 Firewood 3.5 0.343 Charcoal 7.0 0.6863 Natural gas 253.0 k/ 22.84 S/ Elect&rcitX 4000 kWh a 1 toe for hydroelectrlc supply on a thermal replacement basis (thermal officlency 34.04). 1 GMhu 86 toe (thermal replacement value). a/ Exchange rate at tl.e of mission. Rate used In the roport, unless otherI se noted . bl MIIIIonkcal W6f ;/ tce/W4MF TAML Or COUT11111 Page SUMMARYAND RECOIMONDATIONS..........*..........................i I. THEKERGY SECTOR ING ... 1 The goog....................... .e.e ceeco....c c .e.c.........1 InitialImpact of the Oil Price Decline................ 2 Energy .................. ecc..... 22esources Energy Consumption4......... ...... ;c.......... ..... 4 II. HYDROCARRONEXPLORATION AND DEVEL0PMHKT..**.................8 Background ....* ..................................... 0*6 8 Geologyof the Region.......... .. e8.e.c..... c cec- 8 Explorationand ProductionHistory........o...........e.. 9 Past Activities..oeeocoo..oocoe..o.t.o.eceooe.e.ccc.eo 9 CurrentActivities.................................... 10 FuturePetroleum Production Prospects*.***..*..**o*.****. 11 Developmentof ProvenReserves... ..-.-..... 11. Oil ProductionScenarios.o ...c.e....... 12 Legal and FiscalFramework ......................... *...... 13 SectorOrganization... .. o.oo...............*.e.c.... 15 Potentialfor NaturalGas Development.*o0......... .... 16 III. PETROLEUM SUPPLYAND DISTRIBUTION ... 19 Petroleum Product Demando. .................... o.......... 19 Petroleum Refiningz.eo.o....o. o......e.*eoo.....o..e.co 20 SupplyArrangements for Crude Oilile.ce.ccceceeo..e.e.. 21 ProductMarketing and Distribution....................... 22 MarketingAr ranganntgements................... 22 FinancialDifficulties of PIZO. I ZO...............000..22 ProductDistribution Strategy...........to............. 24 InstitutionalIssueso..o........... .soo .c e..oc.oe.e..00.0 26 PetroleumProduct Pricing.c. 28 Ex-RefineryPrices...eo....o.o...o.o .........oo... ..-. 28 RetailPrice Structuresoo.....*oe ...... cc....c.c...co.. 32 IV. ELECTRIC.Oge................. .. ............. 37 Introductior......#&..... **oo9O**....a as .eeaas***eae .. 37 Main SystemCharacteristics.............. .... .... *..... 37 Generationand Tran s mi ssion..............................38 Distribution........................ee...........e.....40 Demand Characteristic. 40 DemandP isf i l e s 40 DemandForecasts r e c a s ts..........................e....41 Medium-TermSystem tievelopment: 1987-19957............... 42 Long-Term System Development 45 Interconnectionof LBV and POG 45 Other Subsector Isus*.......*49 ElectricityTari ffs 49 Reformof PublicService Regulations................... 53 S8EG'sFinancial Si tia t i o n 55 TABLES 1.1: Gabon - Indicatorsof CommercialEnergy Consumption 1978- 1 6 1.2: Gabon EnergyBalance, 1985 7 2.1: Annual PetroleumProduction by Operator,1976-1986....... 10 2.2: ProjectedAnnual Output of FieldsCurrently in Productionoo*ee**ooooeo*******ooo.ooooosoo*ooo*oo*****# 11 2.3: ProjectedOil Production,1986-l992.*$o.................. 13 2.4: ProjectedDevelopment Expenditures, 1986-1991,......... 14 3.1: DomesticPetroleum Product Sales, 1980-1985...........*. 19 3.2: SOCARARefinery Characteristics ......................... 21 3.3: DomesticMarket Shares of the Distribution Companiesby Product,1985 23 3.4: RetailMarket Indicators for PetroleumProducts, 1985................. g.e...... e.g.................. .... 26 3.5: SuggestedInvestment Program 1987-1991.7-1991*0006*060600 27 3.6: Comparisonof Ex-RefineryPrices and Import Parity, 1986 30 3.7: Major Componentsof the PetroleumFroduct Price S t r u c........... t .................u re................. 33 3.8: Evolutionof Taxes and Subsidieson Petroleum Product Prices 35 4.1: Main SEEG SystemCharacteristics, 1985....9 8 S............38 4.2: Cabon ElectricitySales - 1985.... 41 4.3: RevisedElectricity Demand Forecasts:1986-1995.......... 43 4.4: PotentialHydroelectric Plants near Libreville........... 46 4.5: ProjectedInvestment Program for Electricity Subsector1987-1995 48 4.6: SEEG TariffStudy - Low Voltage..........................51 4.7: SEWG TariffStudy - Transmissionand MediumVoltage...... 52 4.8: ArrearsPayable on SEEG Accounts...............o........55 1 Gabon:Commercial Energy Consumption..................... 58 2 InvestmentExpenditures for PetroleumExploration, 1977-1985....... S9 3 Gabon- WellDrilling History, 1976-1985................. 60 4 InvestmentExpenditures for PetroleumDevelopment,