New Report Available: Cameroon Oil & Gas Report Q3 2016

With an FID on Golar LNG and a stronger - than - expected oil production growth, Cameroon benefited f ro m an upward revision in both oil and gas production over our forecast period. In addition, the country will now become an LNG net exporter from 2017 onward, an important tool for exports diversification , notably after the large oil price drop over the past year. Nevertheless, we maintain that Cameroon remains a modest oil and gas producer and more exploration will need to take place to boost its long-term prospects further.

Ongoing exploration provides much-needed upside risk to Cameroon's oil and gas reserves. The country's offshore basins are the most prospective, with the Rio del Rey Basin to attract the most interest. In the context of bearish oil prices, we believe that Cameroon stands to benefit from companies refocusing investments towards more proven and shallow-water offshore plays.

In December 2015, Bowleven submitted the Bomono Exploitation Authorisation Application (BEAA) to the Cameroon authorities as planned. As of early 2016, the company reported that its extended flow test programme at the Moambe and Zingana wells on Bomono is now complete, with promising results which support plans for initial supply of between 51-61mn cubic metres of gas per day, geared towards power generation. In April 2016, the company secured a one-year extension to the Bomono exploration permit as it seeks approval towards development of the finds. The company has also reportedly begun discussions with potential gas offtakers and signed an MOU ENEO.

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In February 2016, Victoria Oil and Gas further expanded its presence in the area by reaching an agreement with Glencore Exploration Cameroon Limited and Afex Global Limited to acquire a 75% interest in Cameroon's Matanda PSC, with AFEX retaining a 25% share. The North Matanda field is estimated to hold an estimated P50 'gas-in-place' volume of 1.8 Tcf and 'condensate-in-place' of 136 Mmbbl. A work programme was submitted for further seismic and well drillings targeted by Q416.

We have recently increased our Cameroon oil production forecast as a result of stronger-than-expected oil production growth over 2015. We now expect production will continue on a slow, but upward trajectory to above 100,000b/d until 2020, with upside risks based on pending development plans.

We maintain our current refining forecast, keeping it unchanged this quarter. There are no updates on progress toward the Limbe refinery expansion plans. We note increasing downside risks to the project over the coming quarters, with the government critically lacking funds due to falling oil prices.

A small boost in crude oil production should maintain Cameroon's status as a net crude oil exporter in the medium term. The refinery expansion project should help boost Cameroon's small net refined products exports by 2017.

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