Cameroon: Revenues steady although production declines

Oil production in Cameroon continues to decline because of maturing oil fields and failing investments.

Oil production in Cameroon continues to decline because of maturing oil fields and failing investments, but government revenues from the sector remain stable at annual average of US $1.2 billion.

This is because of increasing oil prices and new revenues from transit fees on the Chad-Cameroon pipeline, reveals a report from Cameroon Extractive Industries Transparency Initiative (EITI).

EITI is the global standard promoting openness about revenues from natural resources.

By implementing EITI, Cameroon is required to produce an EITI Report every year and the information must be no older than maximum two years. In these reports companies disclose what they have paid, governments disclose how much they have received and a third party compares the two figures.

Cameroon published two EITI reports in March 2013 with information from 2009 and 2010.  Cameroon will need to publish a 2011 EITI Report by 15 August 2013 in order to comply with the EITI Requirement of timely and regular reporting.

The EITI Reports showed that oil production fell at a rate of 12% per year from 2008 to 2010 when it fell to under 24 million barrels. Despite this decline, oil products accounted for 50% of total exports in 2010.

According to the reports the government received 66% of all oil produced in the country, as agreed with oil companies in “production-sharing contracts”. Selling the oil received from the companies was the government’s largest revenue from the extractive industries.

Cameroon lifts veil

Among the 17 oil and gas companies that operate in Cameroon, the three largest contributors are the state-owned Société Nationale des Hydrocarbures (SNH), Pecten Cameroon and Total, who paid 88% of all the taxes reported.

The level of disclosure by SNH was unprecedented and includes all commercial activities of the national oil company: the quantities of oil received and sold on behalf of the state, its payments to the government, and the revenues allocated by parliament for its functioning.

Detailed reporting from SNH was key in providing a more comprehensive overview of the fiscal revenues from the oil, gas and mining sector to oversight institutions, such as parliament and the auditor general office.

With an improved quality and more timely disclosure, EITI Reports in Cameroon will shed light on this key sector of the economy and help improve the management of the revenues. Cameroon did not have mining operations at industrial scale in 2010 and the sector only yielded 2% of the extractive revenues.

The reports also describe the “beneficial ownership” for 16 contracts relating to oil production. Information about beneficial ownership makes it clear who ultimately owns and controls the companies operating in Cameroon.

In 2011, Cameroon had conducted its first Validation, the EITI’s quality assurance mechanism, but had failed to become Compliant with the EITI Rules. A second validation is due to be completed before 15 august 2013