Producing oil only to import gas

SNH (state oil company) headquarters, Yaounde. Photo by Christiane Badgley

Crazy, isn’t it. Cameroon produces oil and, of course, transits Chad’s oil across its territory, but imports all of its gasoline and kerosene. And in 2010 the government subsidized imported fuel to the tune of $276 million.

That’s one part of the “resource curse” that gets less coverage, but fits completely into to the post-colonial (or neo-colonial, if you like) model of African countries that export raw materials only to import those same materials as finished goods. Gasoline isn’t exactly a “manufactured” good, but why should Cameroon import all its gasoline (much of it smuggled in, by the way, from the Nigerian oil-bunkering trade)?  Wouldn’t it make sense to invest in refining capacity? And why does Cameroon subsidize fuel?

According to a brief article from Dow Jones, picked up by CameroonOnline and posted below, the Cameroonian government spent $276 million subsidizing fuel prices in 2010.  As the article mentions, Cameroon erupted in violence in 2008 when armed forces fired on crowds protesting sky- rocketing food and gasoline prices.  There has been no investigation of the more than 40 deaths (unofficial estimates are much higher) that occurred during the 2008 confrontations and it won’t take much to send angry Cameroonians back into the streets. The political situation in Cameroon explains the subsidy, but it would be interesting to see some details on exactly what is subsidized and how, because gas prices in Cameroon — set by the state — are still high, not much different than gasoline prices in France.

Cameroon Spends XAF138 Billion Subsidizing Fuel Prices In 2010

YAOUNDE, Cameroon -(Dow Jones)- The Cameroon government provided 138 billion CFA Francs ($276 million) to subsidize fuel prices at gasoline stations nationwide in 2010.

“The total subvention to stabilize the prices of petroleum at the filling stations in 2010 stood at around XAF138 billion, up 500% from the previous year, ” the state-owned Hydrocarbons Stabilization Fund said Monday.

Rising fuel and commodity prices sparked a nationwide popular uprising in February 2008 during which at least 40 people died in clashes with troops.

The fund statement comes a week after the company held its board meeting to evaluate its activities over the past year and to prepare for the new 2011 financial year, which begins January.

Cameroon’s three fuel types currently sell at XAF569 a liter for essence, commonly known as super, XAF535 a liter for diesel and XAF365 a liter for kerosene.

Cameroon imports its soft crude oil from neighboring Nigeria and Equatorial Guinea, according to statistics from the government-run National Hydrocarbons Corp., which manages, markets and co-ordinates the activities of Cameroon’s oil industry. Import figures were not readily obtainable.

The Cameroon government owns the National Refinery Corp. but doesn’t treat Cameroon’s locally produced hard crude.

The West African nation’s daily oil output of heavy crude has fallen to around 70,000 barrels, from the estimated 85,000 barrels recorded in 2008, according to data from the National Hydrocarbons Corp.

One Response to “Producing oil only to import gas”

  1. dave anson says:

    The Govt owned (66%) Limbe refinery planned expansion is supposed to address this issue by enabling the refinery to treat the cameroon crude.

    Ownership: Sonara (Société Nationale de Raffinage)
    * Government of Cameroon (66%)
    * TOTAL (18%)
    * ExxonMobil Corporation (8%)
    * Shell International Ltd (8%)

    Press release material is copied below.
    Foster Wheeler AG (Nasdaq: FWLT) announced today that its Global Engineering and Construction Group, has been awarded an engineering, procurement, and construction management (EPCm) services contract by Société Nationale de Raffinage (SONARA) for Phase 1 of the Limbé Refinery upgrade and modernization project in Cameroon.

    Foster Wheeler has already completed the front-end engineering design for the entire project. Phase 1 includes the revamp of the existing crude distillation unit, addition of a new vacuum distillation unit, new catalytic reformer unit, and power generation and associated offsites and utilities facilities.

    “This project is of significant strategic importance for Cameroon, allowing the Limbé Refinery to process local crude and condensate while increasing processing capacity and improving overall refinery utilization,” said Umberto della Sala, president and chief operating officer, Foster Wheeler AG. “It will also enable SONARA to market more value-added products such as kerosene and diesel once the overall project is completed. SONARA is a very important client with whom we have established a strong relationship as part of our strategy to develop more business in Africa.”

    The terms of the award were not disclosed and the contract will be included in Foster Wheeler’s second-quarter bookings for 2010.

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