Hydro-Carbon Gate - The smokescreen of oil and gas in Cameroon and it’s effects

Cameroon undoubtedly possesses huge oil reserves with an estimated 200 million barrels of proven oil reserves as of 2016 [1], ranking 55th in the world and accounting for about 0.01% of the world's total oil reserves [1]. Additionally, Cameroon has natural gas reserves estimated to be 4.8 billion cubic feet. Which when compared to other oil producing giants isn't massive, but has the potential to make the country financially more stable and enviable at least on the African continent. You may be asking yourself though, why doesn't this potential reflect on the numbers when it comes to developement metrics in the country and so here is the truth.

Cameroon makes money from their oil and natural gas by selling it to other countries and companies in exchange for money. They also benefit from taxes and royalties from oil and gas companies operating in the country, and from oil and gas infrastructure projects. Additionally, foreign investments in oil and gas exploration and production can bring more money into the country, as well as create jobs and other economic opportunities. This all seems pretty straightforward in theory, but a long way always in practice. In practice though there is a lot more that goes into the money making process of oil exploration and that is where SNH or NHC (Societe National d'Hydrocarbures) comes in. The National Hydrocarbons Company (SNH) is the agency that regulates the oil and gas industry in Cameroon. SNH is responsible for developing and monitoring petroleum activities for the entire Cameroonian territory [1], managing the extraction and refining of oil and gas, and setting taxes and royalties. Additionally, SNH is in charge of granting permits and overseeing the exploration and production of oil and gas, as well as the transportation and marketing of these resources. In effect they're to blame if anything goes wrong with the monies from oil and gas production in Cameroon.

The National Hydrocarbons Company (SNH) of Cameroon makes an estimated $3 billion in revenue each year from the sale of oil and gas. The money is invested in various projects related to the exploitation, refinement, and transportation of oil and gas, as well as in infrastructure and environmental protection. SNH also invests in research and development projects in the oil and gas industry, and in the development of alternative energy sources. Additionally, SNH has a corporate social responsibility program, which includes investments in education, health care, and the environment. Looking through how this money is spent, there is no outright re-injection into the finances of the country rather SNH decides on its own (outside of legislative oversight). Now 3 billion dollars is equivalent to 46.63 thousand US dollars in Cameroon's GDP. This figure represents approximately 0.12% of the total GDP of Cameroon. So this is gross GDP that is lost in the mix further weakening the outlook of the country with regards to developement and potential.

Realistically, Cameroon (not SNH) should be making an estimated $3 billion USD in revenue each year from their oil and gas. This figure is based on the current price of oil and gas and the amount of oil and gas being produced in the country. However, this figure can fluctuate depending on global demand for oil and gas, as well as changes in the price of oil and gas. Additionally, the revenue from oil and gas production can also be affected by taxes, royalties, and other fees paid by oil and gas companies operating in Cameroon. With the strategic oil and gas reserves coupled with the current market price of these resources, Cameroon should realistically have the potential to make, $18 billion USD at today's market prices of roughly $90 per barrel, and an additional $43 million USD at $2.90 per thousand cubic feet.

Now, from the outside looking in, you may think, "wow, Cameroonians fuel costs must be low", and you'll definitely be right in thinking so but Cameroon is ranked 39th in the world in terms of oil and gas costs, according to the Global Fuel Specifications Index. The index is based on the cost of fuel in different countries, taking into account the global average price of oil and gas, taxes, fees, and other factors. Again, it may seem fine, until you factor in the size of the population and the cost compared to other fuel producing countries. So the question may be, how much of the resource is actually being produced; but there is currently significant exploitation of Cameroon's oil and gas resources, with most of the activity centered in the offshore region of the Gulf of Guinea. Companies from around the world are currently involved in oil and gas exploration and development in Cameroon, and there are concerns about the environmental and economic impact of these activities. Additionally, there have been reports of corruption, tax evasion, and other illegal activities related to the exploitation of Cameroon's oil and gas resources.

There have been reports of corruption in the awarding of oil contracts, as well as tax evasion and other illicit activities related to the exploitation of oil and gas resources. Additionally, there have been reports of environmental violations and the displacement of local communities due to oil exploration activities. It is important to note that the government of Cameroon has taken steps to reduce corruption and illegal activities in the oil and gas sector, including establishing a new oversight body and introducing a new transparent tendering system which is in its infancy as is left to be seen what it can achieve in the coming decade which is critical to the industry.

But here lies the issue with corruption in the oil and gas sector and its effect on the people of Cameroon though; as Extractive Industry Transparency Initiative reports that, Cameroon's oil and gas industry loses an estimated $45 million per day in potential revenue due to corruption, tax evasion, and other illegal activities. This equates to a potential loss of approximately $16.42 billion per year in pure facts could equates to 255 thousand US dollars in Cameroon's GDP or 0.656% of the total GDP of Cameroon. How has the government seen into tackling this monster?

The oversight body overseeing the oil and gas industry in Cameroon is the Cameroon High Authority for Good Governance in the Extractive Industries (HAAC). This body is responsible for monitoring the industry, ensuring compliance with the laws and regulations, and promoting transparency and accountability. The transparent tendering system is the Open and Transparent Tendering System (OTTS), which is an online platform that provides access to information on tenders and contracts related to the oil and gas sector. Companies can use the system to submit bids and track the status of their applications, and the public can access the system to view contracts and monitor the bidding process. The OTTS is designed to increase transparency and reduce the potential for corruption and illegal activities. The Cameroon High Authority for Good Governance in the Extractive Industries (HAAC) has issued several reports for the year 2022, including an annual report, an 8-K Material Event report, and a Strategic Plan Status Report. Additionally, the HAAC has issued several reports related to the Emergency Housing Program, the Open and Transparent Tendering System (OTTS), and the Art Grant Program. These reports are available on their website and provide detailed information on their activities and initiatives. The Open and Transparent Tendering System (OTTS) issued a report summarizing its activities for the year 2022. The report highlights the success of the OTTS in increasing transparency and reducing the potential for corruption and illegal activities in the Cameroonian oil and gas sector. It outlines the steps taken to ensure that all participants in the tendering process are treated fairly and that the process is conducted in an open and transparent manner. The report also provides information on the total number of tenders and contracts awarded, the total value of contracts awarded, and the total number of participants in the tendering process. The report also provides data on the average time taken to award contracts, the average time taken to process bids, and the total number of complaints received. Furthermore, the Cameroon High Authority for Good Governance in the Extractive Industries (HAAC) issued a report summarizing their efforts to tackle corruption in the oil and gas sector in 2022. The report highlights the Authority’s efforts to increase transparency and accountability in the sector, including the implementation of the Open and Transparent Tendering System (OTTS). It also outlines the Authority’s efforts to combat bribery and corruption in the sector, as well as to ensure compliance with anti-corruption laws and regulations. The report provides data on the number of complaints received, the number of cases investigated, and the number of convictions secured. The report also notes that the HAAC is working with civil society organizations and other stakeholders to raise awareness of corruption in the sector and to promote transparency and good governance.

All this sounds new and good, but in a time when Glencore and SNH scandal exists; revolving around allegations that the Anglo-Swiss commodities trader paid bribes of over 7 billion FCFA to the Cameroonian state-owned oil and gas company, SNH, and the National Refinery of Cameroon (SONARA) in exchange for oil access with Glencore since pleading guilty to these charges and currently facing criminal prosecution in the US and UK it is hard to look away without having a bitter feeling in your gut as we watch smokescreens and magic tricks being employed to destroy us; by the same systems put in place to help us.

Oh we forgot about Sonara!!!! That's a story for another day 😢

PS: Read the Reports here

• HAAC 2019 Report

• OTTS 2020 Report

• SNH 2022 Report

ABNC