VAALCO Offshore Gabon Oilfield Development Project

completed

The project will involve the completion of the four existing wells, the drilling and testing of approximately two additional wells and the installation of subsea equipment. VAALCO will also lease a floating production, storage and off-loading vessel (FPSO) with a capacity of 30,000 barrels per day. IFC’s participation in this project will fulfill a number of important objectives: (i) IFC would encourage investment by smaller, independent producers in the hydrocarbon sector which has experienced a significant decline in output in recent years, (ii) through the B-Loan program, IFC would provide the sponsor with an opportunity to tap into international capital markets for the first time, and (iii) IFC is providing important capacity building opportunities for VAALCO by improving its environmental planning and mitigation standards and helping conform its existing corporate Environmental Management and Emergency Response Plans to its operations in Gabon.The project has a number of developmental objectives. Project revenues, in the form of royalties and production sharing, will help ease the government’s current budgetary constraints by providing over US$20 million annually on average in the early years of operation. The government is estimated to accrue up to 25% of the total revenues or US$200 million in the proved reserves case over a ten -year production life. In addition, the government receives bonuses totaling US$900,000 when certain production milestones are met. Other positive impacts on the economy include: (i) a required contribution of US$0.05 per barrel to a Hydrocarbon Support Fund created for the purpose of developing petroleum research in Gabon, (ii) annual contribution for the training of Gabonese nationals in the oil and gas sector, and (iii) a 25% discount on oil supplied for domestic consumption.