Gabon Stands Up to Chinese Oil Co., Withdraws Rights

Gabon Stands Up to Chinese Oil Co., Withdraws Rights

Chinese oil giant Sinopec has reached a bump in the oil industry road as Gabon has withdrawn Addax Petroleum’s — a Sinopec subsidiary — exploitation rights at Obangue oilfield, Channel News Asia Reported.

On account of mismanagement, environmental abuse and failure to “meet contractual obligations,” production responsibilities — 9,000 barrels per day — have been transfered to the Gabon Oil Company (GOC), a state-run entity, according to Channel News Asia.

“After several months of fruitless negotiations, we decided definitively to withdraw the Obangue field from Addax Petroleum,” Oil Minister Etienne Ngoubou said in the report.

According to Channel News Asia, Addax Petroleum has been exploring in Gabon since 1996. However, Sinopec acquired the company in 2009. Gabon is said to have never encountered such a dispute as only four oil companies are currently operating in the state.

Addax’s communications director Hugues-Gastien Matsahanga denied GOC’s claims saying the company has never breached any contracts nor disregarded responsibilities.

“Addax Petroleum has never been the object of a conviction for the slightest failing in its fiscal, technical and environmental obligations. We challenge the requisition and reject all the accusations leveled against us,” he said in the report.

When GOC withdrew Addax’s rights, the company shut down immediately, eliminating a cooperative transitional period. All continued operational duties were left up to the state. Addax has recently accused GOC of unnecessary harassment and will pursue claims in Paris’ international Chamber of Commerce.

Nonetheless, Addax wants to continue working in the state as the company still holds exploitation rights to other oilfields. According to Channel News Asia, 15-20 percent of the company’s global production takes place in Gabon. Also, If the company does not make an effort within 15 months to tackle GOC’s claims, Addax may be stripped of rights at their second oilfield, Tsiengui.

Production and major oil discoveries have been stagnant in Gabon, which is why oil analysts have advised the state to take precaution in dealing with the recent incident. Although petroleum reform laws allow for state-run oil companies to better access and control resources, the state is not looking to deter investor nor create roadblocks for economic stimulation, Channel News Asia reported.

“We’re not saying that contracts are too favourable to oil companies,” Ngoubou concluded, “but that unfortunately the benefit to the Gabonese economy is too slim and that (the rules) have rarely been applied.”