Business News of 2014-01-08

Ivory Coast sees soaring oil output rivaling Ghana by 2019

Ivory Coast Prime Minister Daniel Kablan Duncan said his nation will boost oil production within five years to 200,000 barrels a day, rivaling neighboring Ghana as stability returns to a country racked by a decade of turmoil.

The West African nation wants oil companies to increase exploration and drilling offshore after output more than halved to about 30,000 barrels a day because of technical problems, he said in an interview Jan. 6. Ghana pumps about 100,000 barrels a day and wants to more than double output to 250,000 by 2021. Ghana is West Africa’s fourth-largest producer, after Nigeria, Equatorial Guinea and Gabon.

“We have about 50 oil blocks of which half have been awarded,” Duncan said in the commercial capital, Abidjan. “We expect to add at least five wells a year.” President Alassane Ouattara has pledged to spur economic growth by investing in energy and infrastructure to sustain growth near 10 percent annually.

The economy of the world’s largest cocoa producer has expanded at a faster pace than sub-Saharan African nations since gross domestic product contracted in 2011 following post-election violence that left more than 3,000 dead.

The government will sell Eurobonds in the first half of the year, the first since a 2011 default, to fund the projects and is turning to China for additional financing. The economy will expand 10 percent this year, from 9 percent in 2013, Duncan said.

Bond Yields

Yields on Ivory Coast’s $2.5 billion of dollar bonds due 2032 fell 1 basis point, or 0.01 percentage point, to 7.48 percent at 9:13 a.m. in London, where the debt is listed. The government will seek to sell $800 million to $1 billion in the new Eurobond offer this year, Duncan said.

Foreign donors have pledged $8.6 billion to fund $19 billion of projects in the Ivory Coast in the next two years. Chinese agencies and banks, including the Export-Import Bank of China, plan to lend $10 billion to fund infrastructure projects in the next six years at below market rates, Planning Minister Albert Mabri Toikeusse said in July. The Chinese have offered Ivory Coast 20- to 25-year loans with interest rates between 2 percent and 3 percent, Duncan said.

Ivory Coast missed out on soaring oil prices in the past few years as output dropped to 30,000 barrels a day last year from about 60,000 barrels a day in 2008. Total SA, U.K.-based Tullow Oil Plc. and Anadarko Petroleum Corp. operate in Ivory Coast. Ghana and the Ivory Coast ended a dispute over the delineation of a maritime boundary in which an oilfield is located.

The government is also reviewing its mining regulations to as it plans to receive increased revenue from an expanding mining industry, Duncan said. “The state has begun to impose order in the sector,” he said.

Ivory Coast contains reserves of gold, diamonds, nickel, manganese and iron ore. Parliament is set to endorse a new mining code while a minimum investment level for prospect licenses was set last year.