Note: This is an extract of the EITI Report 2013

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                                       3. CONTEXTUAL INFORMATION ON THE EXTRATIVE INDUSTRY

3.1. Extractive sector in Cameroon

Cameroon has substantial hydrocarbon resources, including offshore oil deposits. Cameroon also hosts on its territory the pipeline which serves as a route for transportation of Chad’s oil production.

It also has a sub-soil rich in mineral resources, which includes bauxite, cobalt, gold, diamonds, iron and uranium, all of which are still relatively underexploited.

Bauxite reserves are located in the North of the country, in the Western Adamaoua region. Cobalt reserves are mainly available in the South East, near the town of Dschang. The main deposits of gold and diamonds which have been discovered are located around the Bétarié-Oya city in the East of the country. Cadre réglementaire et contexte du secteur des hydrocarbures

3.2. Regulatory framework and context of the hydrocarbons sector

3.2.1. General context of the hydrocarbons sector8

Oil exploration in Cameroon effectively began in 1947. The first research permit for hydrocarbons was granted on 16 April 1952 in the Douala Basin. Cameroon effectively became an oil producer in 1977. From 1980 to 1986, the country experienced its most active exploration and production period, with a record production of 186,000 barrels/day in 1985.

Since then, production has declined due to the depletion of reserves, the ageing infrastructure and the deferral of certain development projects and investments in the wake of the financial crisis.

In 2013, oil production reached 24.2 million barrels. This production comes mostly from offshore fields in the Rio del Rey basin, while the rest comes from the Douala basin. Rio del Rey is an old deposit that extends to 7 000 km² in the Niger delta and generates 90% of national oil production. The deposit of Douala/Kribi-Campo, located on the West Coast of Cameroon, covers an area of 19,000 Km2 of which 7,000 Km2 are onshore.

Year

Oil Production in million barrels

% Annual growth

2009

26,68

2010

23,31

-13%

2011

21,68

-7%

2012

22,38

3%

2013

24,28

8%

Cameroon produced 24.28 million barrels of oil in 2013 which represents an increase of 11% compared to 2011. This rise is mainly due to Perenco which became the main operator on the Rio Del Rey basin, after the resumption of Total E & P which produced most of the oil in Cameroon. According to NHC, Perenco reopened some wells and has embarked on the optimisation of these mature fields. In addition, Addax who took over Pecten, the second operator in production, has conducted similar operations in the Mokoko Abana field (Rio del Rey basin).

Proven reserves decreased from a maximum of 555 million barrels in 1986 to an estimated of 200 million barrels in 20139, mainly due to decrease of oil deposits. Annex 7 shows the map of Cameroon oil blocks at 31 December 2014.

3.2.2. Legal and fiscal Framework

Hydrocarbon exploitation in Cameroon is carried out in accordance with Act No. 99/013 of 22 December 1999 related to the Hydrocarbon Code and its implementation Decree No. 2000/485 of 30 June 2000, General taxes and Hydrocarbon Contract Codes.

Authorisation of exploitation related to an hydrocarbon contract could be either a concession for exploitation in the case of a Concession Contract (CC) or an exclusive authorisation of exploitation in the case of a Shared Production Contract.

CC gives to the oil company exclusive rights to explore, develop, produce and commercialise the resource by taking the associated risks at its own expense. In return for the concession, the contractor is required to pay royalties and taxes. Currently, oil production contracts are concluded in the form of CC.

For Production Sharing Agreements (PSA), the State retains ownership of oil resources in the ground. The agreement between the State and the oil company stipulates that the latter bears all the exploration and development costs in return for a share of production, but entitles the oil company the right to explore, develop and produce oil.

Oil contracts and the Petroleum Code provide the State with a set of tax instruments such as:

Taxes

For CC

For PSA

Royalties proportional to the production

ü

Signature and production bonuses

ü

Corporate tax

ü

Land royalties

ü

ü

Profit oil

ü

The sector also benefits from tax exemptions and incentives which relate mainly to VAT, import duties and withholding taxes on dividends, except for withholding taxes held by NHC.

With regards to confidentiality, Article 105 of Decree No 2000/465 of 30 June 2000 sets out the procedure for applying Law No 99/013 of 22 December 1999 on the Petroleum Code as follows:

“The Minister in charge of hydrocarbons preserves the confidentiality of all documents, reports, statements, plans, data, samples and other information submitted by the holder under the Code, the implementing decrees and the Hydrocarbon Contract. This information may not be disclosed to third parties by the Administration prior to rendering the scope to which they relate or, before the end of Petroleum Operations in the absence of rendering. If those documents, reports, statements, plans, data, samples and other information referred to in the preceding paragraph are covered by a confidentiality obligation stipulated in the Hydrocarbon Contract, the State, institutions and public bodies are required to comply with this obligation”.

Information related to contracts is therefore confidential and cannot be not disclosed to the public.

3.2.3. Institutional framework

The hydrocarbon sector is under the supervision of the Ministry of Mines, Industry and Technological Development11. This ministry is responsible for the development and implementation of policies for the sector as well as the management and evaluation of extractive resources and monitoring of the hydrocarbon sector. The following structures represent the institutional framework for petroleum activities in Cameroon:

Institution

Role

The President of the Republic

Coordinates the hydrocarbon sector activities through NHC.

The Minister of Mines, Industry and Technological Development and his cabinet

He plans and coordinates the implementation of the national policy on mines and hydrocarbons. His prerogative is to inspect all petroleum activities on the national territory. He is responsible for

- determining the areas open to petroleum operations;

- the approval of standard contracts;

- the authorisation of disposals / transfers of rights and obligations under oil contracts;

- approval of the changes in company shareholdings;

- prospecting authorisation; and

- approval of protocols, agreements or contracts between partners in oil contracts.

The Directorate of Mining

It is responsible for implementing national policies related to the mining and hydrocarbons sector.

Monitoring the management and control and the national mining activities, as well as the transport of hydrocarbons by pipeline and their removal at the storage terminals.

Participates in oil and gas operations control activities.

Monitoring of the State’s participation in the exploitation of minerals.

Sub-directorate of Hydrocarbons

It is responsible, amongst other, for the preparation of acts of authorisation, exploration and exploitation of hydrocarbons; the monitoring of exploration and exploitation activities of hydrocarbons as well as collection and analysis of reports and results of exploration and exploitation hydrocarbon works.

National Hydrocarbons Corporation (NHC)

It is a State company under the authority of the President of the Republic. Founded in 1980, NHC is tasked, amongst its other functions, to manage the interests of the Government under the mandate given to it by the State of Cameroon for the operation of oil production and exploitation. It undertakes commercial transactions related to buying and selling of crude oil on international markets. Revenues from the sales of the State oil shares are subsequently transferred to the Treasury in a bid to finance the State budget.

 

National Refining Company (SONARA)

It ensures the supply of Cameroon in terms of oil products. The company performs the refining of crude oil sourced from NHC, amongst other sources, at market price.

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