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Oil markets vigilant following military coup in OPEC member Gabon
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Coup reflects heightened risk in oil market, West Africa
Oil markets have been left smarting by a second coup in five weeks in an African oil producer, after military leaders in Gabon placed longstanding president Ali Bongo under house arrest Aug. 29, bringing the recent wave of West African putsches to OPEC’s doorstep.
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The situation remains fluid, with crowds turning out in numbers to celebrate the military takeover, which looks set to end the Bongo family’s 56-year reign.
However, oil companies and traders said it was too early to predict supply disruption in Gabon, which pumped 210,000 b/d of crude oil in July, according to the Platts OPEC Survey from S&P Global Commodity Insights. That makes it a relative minnow in terms of global crude supply, although its barrels are an increasingly significant source for Israel, which may be forced to search for alternatives if Gabonese exports are impacted.
An industry source familiar with the generals’ thinking told S&P Global on condition of anonymity that the country’s new rulers “are not touching the fields,” adding that “production will stay the same.”
Gabon’s largest producers include Anglo-French independent Perenco, French company Maurel & Prom and Norway’s BW Energy — which is halfway through a six-well drilling campaign — as well as a smattering of majors.
“We are following the situation closely . . . All offshore operations are continuing as normal,” Knut Sæthre, CFO of BW Energy, whose Gabon assets are currently producing 27,500 b/d, told S&P Global Commodity Insights.
Maurel & Prom, which is purchasing 40,700 b/d Assala Energy in Gabon from private equity fund Carlyle Group, said the “current situation does not affect our sites of activity where operations are taking place normally, without impact on production.” Tullow Oil, which produced 14,900 b/d in the country in 2022 also said its operations are “currently unaffected by the ongoing political activity and production continues as normal.”
Perenco declined to comment, while other companies with operations in Gabon did not respond to requests for comment.
French miner Eramet, which has large manganese operations in Gabon, said it had halted operations. Meanwhile, risk management firm Ambrey said Aug. 30 that port operations at Gabon’s Libreville had stopped.
“The military will likely refrain from any rapid changes in the business environment in the short run to reassure investors. However, as other coup-hit countries indicate, greater interference in the economy is likely over the longer run, from reviewing to renegotiating contracts to demanding greater stakes in projects,” Maja Bovcon, senior Africa analyst at Verisk Maplecroft, told S&P Global.
Bovcon added that “Whoever runs the country . . . will have to grapple with Gabon’s overreliance on declining oil production and diversify its economy.”
Dated Brent rose 0.7% on the day to $85.87 Aug. 30, S&P Global data showed. Oil traders are closely following potential supply issues as a result of recent production and export cuts by the Saudi-Russia-led OPEC+ group.
“Gabon is a minor OPEC producer, but it serves as a reminder of the geopolitical risk in the oil market,” DNB Markets analyst Helge Andre Martinsen said.
Analysts said Israel, a major buyer of Gabonese crude, could be affected by production issues in the West African country. Israel has already seen its crude supply disrupted this year by export issues in Iraq’s semiautonomous Kurdistan region and has turned to Gabon to help fill the void.
Gabon, which produces medium-sweet Rabi Light and Rabi Blend crude grades, is estimated to have around 2 billion barrels of crude reserves.
Although its production has sunk from a peak of 365,000 b/d in 1996 to around 210,000 b/d as of Aug. 30, Gabon is the only African OPEC member to hit its production quota in recent months.
The attempted coup came hours after the electoral commission said Bongo had secured a third term in office with 64.27% of the vote in a tightly contested election. However, former minister Albert Ondo Ossa, who led a six-party coalition and received 30.77% of the vote according to the commission, dubbed the process “a fraud.”
“In the name of the Gabonese people . . . we’ve decided to defend the peace by putting an end to the current regime,” the military leaders said on national television in the early hours of Aug. 30.
In a short video, Bongo called on “friends all over the world” to “make noise” over the coup. Russia, China and France have all expressed concern.
Bongo and his family have been accused of hoarding the country’s significant oil wealth. French authorities last year charged five of his siblings in connection with an $85 million fraud case.
The coup in Gabon is the eighth across West and Central Africa since 2020 and comes five weeks after Niger’s President Mohamed Bazoum was overthrown by the country’s military junta.
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Oil markets vigilant following military coup in OPEC member Gabon – S&P Global
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