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Oil and Gas Regulations Spotlight: Cameroon

Cameroon’s contribution to the advancement of the oil and gas industry has boosted its economic development and has seen a substantial increase in investments. 2018 was a monumental year for the country, as it became a natural gas producer. Suffice it to say that Cameroon’s upstream sector is a critical part of its economy. As a mature producing nation, it is therefore important that adequate regulations are put in place as this plays an influential role in attracting investments, and driving the growth of the oil and gas industry and, ultimately, the economy.

Oil prospecting in the country began in 1947. The first commercial discoveries were made in the Rio del Rey basin in 1972, with the first ton of oil produced from the Kole field. Production reached the record level of 186,000 barrels a day in 1985[1]. From 1986, production began to decline. Faced with this situation, the Government introduced incentives to boost exploration and production. The measures enacted by the National Hydrocarbons Corporation (SNH) aided in reducing the production decline and has since rejuvenated the country’s extractive sector, including the gas regulatory landscape, to attract investment and improve investor confidence in the region.

The Petroleum Code 2019 repealed the 1999 Petroleum Code to pave the way for a more up-to-date regulatory system offering more contractual and fiscal incentives. The fiscal terms under the recognized petroleum contracts, which are the production sharing contracts (PSCs), concession contracts, and risk service contracts, can all be negotiated due to the flexibility of the new Petroleum Code. For example, there is a fixed division of profit oil which allows foreign companies take up as much as 40% subject to negotiation. There have also been increased tax incentives and the downward review of certain taxes, for example the Special Income Tax was reduced from 5% to 3%. This tax is applicable to the holders of oil and gas contracts and their subcontractors.

The new law also introduced additional requirements such as human resources development, a professional and technical training programme, and local content and local skills requirements including priority employment for Cameroonians and priority allocation of services to Cameroonian companies.

Cameroon‘s downstream sector is also important to the nation’s economy. According to the International Trade Administration, the country has plans to refurbish its national oil refinery SONARA. The high levels of refined petroleum imports have increased the drive to build a second refinery, thus indicating the county’s importance in the advancement of the African oil and natural gas economy. The Ministry of Water and Energy Resources which regulates the downstream industry in Cameroon, also regulates the country’s natural gas industry. A Gas Code was promulgated in 2012 to govern the transportation, distribution, processing, storage, importation, exportation and marketing of natural gas and its by-products within the national territory. This is an important piece of Legislation that underscores the relevance of the natural gas in the industry and the potential benefit to Cameroon.

Cameroon is a member of the Extractive Industries Transparency Initiative, which aims to promote open and accountable management of oil and gas mineral resources. “The State’s regulators have embraced an investor-friendly approach while still protecting the local market. Cameroon has the potential to become powerhouse in the African energy industry and while positive initiatives have been adopted to advance the local industry, we expect to see adequate implementation of the regulations and improvement in the transparency of contracts.”, said Achare Takor, Attorney at Centurion Law Group, Cameroon.

For more information on Cameroon’s oil and gas regulations, and Centurion Law Group’s Investment Guides, please visit:

[1] (SNH, 2018a)