OilVoice - Cameroon Loan Deal Set to Help Increase Production Capacity

Cameroon Loan Deal Set to Help Increase Production Capacity

Monday, January 04, 2010

SONARA, Cameroon's state-owned oil refinery has inked a $98.25 million loan deal in order to upgrade its production capacity at the refinery. SONARA hopes to boost the refinery's capacity from 42,200 barrels per day (bpd) to 70,300 bpd and also to upgrade the facility so that it will be able to process heavy crude oil that is produced in Cameroon, not just light grades that it imports. This is equivalent to a spike in production capacity to 3.5 million tones per annum, from the present level of 2.1 million.

Cameroon's sole refinery, opened its doors back in 1981 and is located in the city of Limbe, some 100km from Douala. The facility has already undergone two upgrades, one in 1996 and one in 2001. About half of the facility's products are sold on the domestic market with the rest distributed to other Central African nations, France, the energy-hungry United States and parts of West Africa.

Oil for the refinery is mainly imported from Nigeria but also from Equatorial Guinea and Angola. However, with the planned upgrade of the refinery, the facility will be equipped to process domestic heavy crude blends. As Cameroon's oil production is currently sufficient to supply all of the refinery's capacity, the refinery upgrade will significantly reduce oil import requirements, at least in the short-term.

The loan has been provided by Afriland First Bank, which has branches in Equatorial Guinea, the Democratic Republic of Congo, Sao Tome and Principe.

According to the Statistical Review of World Energy, published back in June of last year, Cameroon produced 84,000 bpd of oil in 2008. This figure sits slightly above the figure of 81,000 bpd, as previously forecast by the Energy Information Administration (EIA). Cameroon is estimated to hold oil reserves totaling 200 million barrels as at the end of 2008 - according to the Oil & Gas Journal. This is half of the 400 million barrels estimated just one year prior, at the year-end of 2007.

Despite plummeting supply levels, recent discoveries offshore Ghana and off of Equatorial Guinea's coast have raised hopes that Cameroon's waters may hold similar offshore deposits. In particular, the Douala Basin has been cited as a likely area of interest. This recent decline in both estimated reserves and output - which has been declining since peaking at 185,000 bpd some 25 years ago - puts increasing emphasis on the importance of exploration and production. Activity will have to be stepped up significantly if Cameroon wishes to maintain current output levels.

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