The small West African republic of Guinea-Bissau has a small upstream oil industry that has been hampered in the past by civil unrest and border disputes with neighbouring Senegal. Exploration has taken place since the early sixties with a number of licensing rounds to promote the offshore acreage. Since a 1995 agreement, Senegal and Guinea-Bissau jointly manage the disputed offshore border area.
Its downstream oil industry is wholly dependent on refined petroleum products imported from neighbouring countries. Oil-derived products supply 95% of the country’s commercial energy needs.
The industry is regulated by the Ministry of Natural Resources and Industry. The national oil company of Guinea Bissau is PetroGuin (previously Petrominas).
There is good potential for the upstream oil industry in Guinea-Bissau. The area offshore can be considered under-explored as only 10 wells have been drilled in this area during 40 years of exploration. The entire basin contains known source potential with the central portion of the area being the most prospective.
There has been active exploration offshore Guinea-Bissau since the late 1960’s when Esso drilled six wells. In 1974, Guinea-Bissau gained its independence from Portugal and since then exploration has been frequently affected by civil unrest. Offshore exploration has been hampered by a boundary dispute with Senegal, which was not resolved until 1993.
There have been intermittent drives to promote the offshore and a number of international companies have been involved in offshore exploration during the last 40 years. Amongst them number Esso, Elf, Pecten, Monument Oil and Gas (now Lasmo), Sipetrol of Chile, West Oil, Fusion Oil and Gas, Benton Oil and Gas and Petrobank Energy and Resources.
With the election of President Koumba Yala in February 2000, there has been another focus on the upstream oil industry. A licensing round is planned for the fourth quarter of 2000. Petroguin, the national oil company of Guinea-Bissau, in association with First Exchange Corporation, is offering six of the existing seven offshore blocks to international bidders. The rights to the seventh block, Block 2 or Sinapa, are currently held by Petrobank Energy and Resources.
Under an agreement signed in 1995, the area of the border dispute with Senegal, which contains the Dome Flore and Dome Gea discoveries, is now jointly managed by both Senegal and Guinea-Bissau through the Agence de Gestion et de Cooperation entre la Guinee-Bissau et le Senegal (AGC). Under the terms of this agreement, the proceeds from activity in the joint exploration area area are divided between Senegal and Guinea-Bissau in an 85:15 ratio. According to press reports, President Yala is to negotiate with Senegal in 2000 for better terms for Guinea-Bissau in this area. Benton hold the rights to the nearshore Dome Flore Block with Fusion Oil and Gas holding the Deep Offshore Dome Flore Block.
Its downstream oil industry is wholly dependent on refined petroleum products imported from neighbouring countries. Oil-derived products supply 95% of the country’s commercial energy needs. The industry has been sorely hit by the devastations of civil war.
The US Department of Energy reports that consumption of petroleum products in 1997 was in the region of 100,000 tons. This consumption figure excludes product smuggled from Nigeria. The product allocation of consumption is given below:
Product: Consumption 1997 (in metric tons)
Jet fuel: 7,825
Procurement, distribution and marketing of fuels products is carried out by the state owned oil company, Distribudora de Combustiveis e Lubrificantes (DICOL), and the Portuguese oil company, Petrogal. Dicol also owns a storage depot and products receiving installation at Bissau.
The distribution infrastructure consists of river and roads. The road network is in good condition except during the rainy season. Product distribution to inland areas is carried out by private carriers and by barge on three river estuaries of the Geba River. The World Bank sees Guinea Bissau as a country with potential to reduce product supply and distribution costs by introducing more efficient procurement planning activities, opening procurement activities to private operators, revising pricing structure, rehabilitating the existing railway system and generally creating a favorable environment in which investment and free markets can operate.
Pricing is set by the Ministry of Natural Resources and Industry with a cost – plus approach. These prices do not reflect actual procurement costs but are based on Dicol revenue protection. Annual petroleum tax revenue is approximately $55 million per annum and represents 93% of government indirect taxes.