Anadarko Petroleum Corporation (APC), Chevron Corporation (CVX) – Offshore Gabon: The Next Oil Rush?

However, significant hurdles remain for companies wanting to drill offshore Gabon. Chief among them are labor unrest, regulatory uncertainty, and a deteriorating relationship between oil industry executives and the Gabonese government. Some energy companies are worried that a fate similar to the one that confronted Addax, a subsidiary of Chinese oil giant Sinopec Shanghai Petrochemical Co. (ADR) (NYSE:SHI), may await them.

Challenges to drilling offshore Gabon
Last year, Gabon’s government reclaimed Addax’s assets after alleging that the Chinese company breached its contract. Energy company executives say that there’s nothing to stop this from happening again in the future and claim that Gabon wants to reallocate its assets toward its newly created national oil company, Gabon Oil Company.

Some are also worried about the uncertainty surrounding the proposed hydrocarbon code, whose contents are shrouded in mystery, while others are concerned that much of their profits will go toward lining the Gabonese government’s coffers. But Gabon’s oil minister, Etienne Ngoubou, is quick to refute such claims.

He fiercely maintains that the Addax reclamation wasn’t an erratic act, but instead was a much-needed step to take contract breaches more seriously. He’s also not worried about deterring the oil companies that are interested in drilling there, saying that their operations will be profitable even with the more stringent practices the government plans to enforce.

“If cost of access is too high, and doesn’t allow for profitable operations, then don’t come. We know it is profitable and the conditions we propose are not excessive,” he told the Financial Times. The coming months may prove him correct.

The article Offshore Gabon: The Next Oil Rush? originally appeared on Fool.com is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron, Petroleo Brasileiro (NYSE:PBR) S.A. (ADR), and Total SA. (ADR).

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