March 25, 2012:

Seoul — Today, the President of the Gabonese Republic, Ali Bongo Ondimba, visited the largest oil refinery in the world, situated in Ulsan, an industrial city with a population of 1.1 million, located in the south-east of South Korea. The visit comes after the Government of Gabon signed a letter of intent with SK Energy (a conglomerate including Samsung) in January 2012 for the construction of a refinery in Port-Gentil on the Mandji Island.

The daily refining capacity at the Ulsan oil refinery is 1 million barrels, i.e. enough to satisfy the oil requirements of the whole of South Korea, a country of 48.8 million people. The site covers 2,800 hectares, employs 3,000 people and produces 800,000 barrels/day, of which 60% is exported to China. The visit was an opportunity for the Head of the Gabonese State to learn more about the knowledge and expertise of the leading energy producer in Korea (also specialising in petrochemicals), whose technology is admired all over the world.

In 2010, SK Energy submitted a bid in response to the 10th call for tenders issued by the Gabonese Government in relation to 42 offshore deepwater oil blocks, covering an area of 110,000 m2. In January 2012, a letter of intent was signed by both parties. SK Energy is currently engaged in exploration and development activities in 26 oil and gas blocks in 14 countries worldwide.

SK Energy is part of the SK Group, the 3rd largest conglomerate in South Korea, comprising 92 subsidiaries, including Samsung. It employs more than 30,000 people in 113 offices around the world. While most of its business comes from chemical production and the oil and energy industry (SK Energy), the group is also active in construction, shipping, marketing, telephony and high-speed internet. The purpose of the tentative agreement between the Gabonese Government and SK Energy is to build a refinery in the Mandji Island Free Zone within 2 years.

The new refinery would replace SOGARA, the Gabonese Refining Company, which is now old and not capable of processing the quantities required by the President's policy on the development of raw materials. Gabon is still currently exporting 95% of its crude oil, with the remaining 5% being processed locally by SOGARA. If negotiations are successful, the new refinery is expected to process 50,000 barrels/day (vs. the 21,000 barrels/day currently processed by SOGARA). Half of this will be exported, while the remainder will be used locally. The new plant will produce:

• LPG,
• Gas oil,
• Diesel,
• Jet fuel,
• Fuel,
• Refined petroleum.

The cost of building this refinery - around $1 billion - will be shared between Gabon and SK Energy, supported by the Korean International Cooperation Agency (KOACI), which provides subsidies for Korean companies interested in doing business abroad. The climate variable was taken into account in the feasibility studies.

The new entity will limit its emissions of greenhouse gases, recycle natural gas and recover oil residue. The energy produced from the gas released during oil processing will be used to supply the refinery with green electricity.

The Mandji Island Free Zone

To support the President's goal of industrialising the national economy, the Gabonese Government decided to set up economic zones throughout Gabon to foster new centres for growth, which would attract investors and bringing industry closer to resources. The first zones are currently under construction:

- The Special Economic Zone of Nkok (Libreville), designed mainly for processing timber,

- The Mandji Island Free Zone (Port-Gentil), intended to diversify the economy of the region.

Located near Port-Gentil, the economic capital of Gabon, the Mandji Island Free Zone will cover a total area of 1,500 hectares. The project to develop the area was entrusted to the Singapore-based multinational firm Olam.

The company, with a capital of 20 billion francs, will be owned 36% by Olam, 24% by the State and 40% by Gabonese companies that are members of the Chamber of Commerce and Industry.

A contract worth $1.5 billion was signed in 2010 between the Republic of Gabon, the Singapore-based multinational firm Olam and the Indian group Tata Chemicals for the construction of a fertilizer production plant, which will herald the start of activity in this free zone.

This zone will provide many opportunities for investment in:

• Oil-field industries and services;
• Timber processing activities;
• The storage, assembly, and distribution of products; and
• Service activities relating to new technologies, such as training, telecommuting and the promotion of new technologies.

And fiscal incentives:

• Total tax exemption for businesses for 10 years, after which time corporation tax on profits will be limited to 10%;
• Tax incentives for investment and hiring;
• Reduced personal income tax;
• Exoneration of customs duties;
• Absence of import and export licences and price controls;
• Tax-free financial transfers.

Oil in Gabon

With around 30 oil fields, Gabon is currently the sixth largest oil producer in Africa. According to the latest estimates (source: British Petroleum - BP Statistical Review of World Energy 2010), Gabon has 3.7 billion barrels of proven oil reserves, the largest in the sub-region. The Gabonese Government decided to issue a call for tenders to sell off 42 deepwater and ultra-deepwater offshore oil blocks, with a total surface area of 108,000 km² squared. Discussions are underway to create a new Hydrocarbons Code for Gabon, which will provide a secure and more attractive environment for potential investors.

By Allafrica.com