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Cameroon: Crude oil sales forecasted to drop in Q4-2021 despite the rise in production

Cameroon: Crude oil sales forecasted to drop in Q4-2021 despite the rise in production
  • Comments   -   Tuesday, 19 October 2021 15:19

(Business in Cameroon) - Between October and December 2021, three CEMAC countries are expected to contribute to the rise in the region’s oil production. According to the quarterly business survey recently published by the Bank of Central African States, those countries are namely Cameroon, Equatorial Guinea, and Chad. “In Congo, the depletion of oil fields would negatively affect the production dynamic,” the central bank wrote before focusing specifically on the case of Cameroon.  

“During the fourth quarter of 2021, in Cameroon, the production expectations are up compared with production in the third quarter of the same year, according to the SNH (the National Hydrocarbons Corporation). However, prospects are down for sales due to sluggish demand in high crude oil consumption economies still in lockdown,” the BEAC writes. This means that despite a rise in its oil production in Q4-2021, Cameroon could see its sales drop.  

The extent of this projected decline in sales is still unknown. Also, there is no telling whether the improvement in world prices, which led Cameroon to revise the oil revenue forecasts upwards in the 2021 budget law, can offset the impacts of such a drop on public revenues. After a budget amendment decided by the President of the Republic on June 7, 2021, the public revenues expected for 2021 were increased by XAF143 billion, from XAF418 to 561 billion.  

In a report submitted to the parliament in preparation for the budget orientation debate for the 2022 state budget, the finance committee of that institution revealed that in Q1-2021, oil revenues dropped by 14.20% year on year. 

The report also pointed at a 6.82% year-on-year decline in oil production, a rise by 0.49% in the volume of sales and international prices during the period. Between January and June 2021, the price of a barrel of crude oil fluctuated between 50 and over 70 dollars, according to dedicated platforms monitoring the oil market. This positive development is contrary to the price development observed during the same period in 2020 when prices of crude oil fell below US$30 due to the coronavirus pandemic. Because of the said pandemic, the international prices of the oil produced by Cameroon dropped by 39.41%.  

Brice R. Mbodiam

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