From all accounts, it looks like Cameroon has pressed pause on oil and gas. Chevron is ready to invest big to move on the Yoyo Yolanda Unitization. This is a joint development of the Chevron-operated Yoyo (in the Douala Basin offshore Cameroon) and Yolanda (offshore Equatorial Guinea) gas fields.

Perenco started to acquire New Age Energy and work with Lukoil to develop the Etinde license and bring gas into Equatorial Guinea (EGLNG operated by Marathon Oil Corp) or Cameroon, yet the deal died on the vine.

And we saw its last oil licensing round go wrong. In early 2018, for example, only one company responded to Cameroon’s licensing round, in which eight blocks had been available.

Production has declined, and no exploration wells are being drilled. Exploration is the life blood of the Oil and Gas industry and upstream development has met roadblocks and red tape.

Above Ground Risk-Governance

Taxes and rising costs are a major factor in the pause, but not the sole cause. At this point, Cameroon’s decades-long struggle with political corruption is less an open secret and more a fact of life in the country.

In 2022, The U.S. Department of Justice accepted a guilty plea from Glencore — the diversified mining and commodity trading company — for a decade-long scheme that paid over USD 100 million in bribes to officials in Nigeria, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, the Democratic Republic of the Congo, and Cameroon.

Glencore admitted it paid USD 11 million in bribes to Cameroonian officials at the National Hydrocarbons Corporation (SNH) and National Refining Company (SONARA) from 2011 to 2016, all to secure preferential access to oil in the country.

Bribery is, of course, in direct violation of the Foreign Corrupt Practices Act (FCPA), and the company has agreed to pay fines totaling over USD 1.1 billion to help resolve investigations. I am surprised the Norway based Extractive Industries Transparency Initiative (EITI) continues to have Glencore on their board. Glencore is bad news. Oh well, it’s not their fault they weren’t raised right I guess.

This story is not unique, nor is it an isolated incident. Cameroon’s corruption issue is so serious that in 2006 the president decreed the creation of the National Anti-Corruption Commission, most often referred to by its French acronym (CONAC). CONAC has found corruption in a number of sectors, including trade, public contracts, and survey and land tenure.

No matter the industry, every dollar that flows into the pockets of compromised officials and bureaucrats is a dollar stolen from Cameroon’s future. When companies like Glencore pay these officials under the table, it grants them an unfair competitive advantage while their more honest peers are forced to remain idle. Indeed, it’s quite likely that more than a few stalled negotiations and contracts are currently bogged down in the administrative red tape of bureaucrats whose interests are to themselves first and the people of Cameroon second.

Counterproductive Policies

At the start of 2022, the Bank of Central African States (BEAC) implemented stricter currency transfer rules that significantly affected dollar-dependent industries like oil and gas. Despite significant pushback, the stricter rules still stand and continue to obstruct foreign exchange operations crucial to oil and gas investments. This has, of course, directly hurt efforts in Cameroon.

The BEAC policy change is just one of many problematic examples of what I fear to be a growing sense of resource nationalism in several African states, from stricter currency rules to weak production-sharing contracts and unnecessary bureaucratic hurdles. The currency crackdown is well meaning but misguided and especially egregious as it directly helps to solidify an “us versus them” divide that has always and will continue to prove toxic to the oil and gas efforts of all African states. As I have said time and time again, we have infinitely more to gain by inviting and cooperating with foreign oil and gas companies than we do by treating them as sworn adversaries. It is better to reap some of the benefits of the resources beneath our feet and under our oceans with foreign help than to deny it and reap none of them as those resources languish in the earth. The longer these deals are delayed, the more risk they run of the oil becoming stranded.

African governments would do well to remember this simple fact and act pragmatically and expediently in the face of it. Historically, Cameroon has been very cognizant of this, given their generous subsidy and tax waiver programs in the past. Despite their decision to step back on the former, and the poor timing of expiry for some companies benefiting from the latter, these efforts still show that Cameroon understands the importance of working with and attracting investors.

Can Cameroon Get Its Groove Back? There is Still Hope.

Despite the trifecta of obstacles I’ve discussed here, Cameroon’s potential remains vast and largely untapped. With over 4.8 billion cubic feet (bcf) of estimated gas reserves, Cameroon is still ripe for exploration opportunities.

In addition to its rich petroleum reserves, Cameroon annually produces an estimated 1.6 million tons of liquefied natural gas (LNG) and aspires to produce 5 million tons by 2026. (However, reaching that goal will require ample investment and expansion in their midstream and downstream infrastructure. For example: To date, the country only has one oil refinery — SONARA, with a theoretical capacity of 2.1 million tons/year — which is in serious need of upgrades and refurbishment after the fire that ravaged part of the facility in 2019.

As for the corruption front, CONAC has made admirable strides in the past two years.

In 2021, CONAC reported that Cameroon lost FCFA 44 billion (approximately USD 73 million) to corruption practices. Yet just the following year, the agency reported that Cameroon lost only FCFA 5 billion (approximately USD 8 million). That is approximately USD 65 million that instead of flowing into corrupt pockets, found its way into government coffers to help pay for Cameroon’s future, where it belonged to begin with. This massive improvement is a triumph to be celebrated, and the CONAC attributes it to several strategic actions that led to over 7,000 denunciations of corrupt cases and practices.

These results should more than speak for the diligence and competency of CONAC and its investigations. I have no doubts they will continue doing their utmost to root out corruption from every level of Cameroon’s government.

Finally, while these challenges may seem daunting, energy leaders like myself and other stakeholders in Africa’s oil and gas industry will address matters at the African Energy Week (AEW) Conference, Nov. 4-8 in Cape Town, South Africa. The gathering will serve as a pivotal platform for strategic discussions and deal-making opportunities that will in turn allow regional energy leaders, financial institutions, and foreign investors to address regulatory challenges and foster continued investment.

To close this out I want to emphasize one point: The challenges currently hindering Cameroon’s progress are speed bumps, not death knells. While in the short term, doing business especially in oil and gas in Cameroon may not be as lucrative as years prior, in the long term there are oceans of economic potential waiting to be tapped. Not just in oil and gas, but many other sectors beyond. For that very reason it would be foolish to count Cameroon out yet, even despite this seeming pause.