Gabon seeks $1.3bn funding to buy Assala oil company ahead of France's Maurel & Prom

Gabon's military junta, which seized power five months ago in a coup, is causing concern in the oil sector by seeking trading houses' support to finance a $1.3bn deal for private equity giant Carlyle's Assala oil company, challenging a bid accepted from France's Maurel & Prom (M&P) last year. 

In November, the Gabon Oil Company (GOC) sent Carlyle International Energy Partners (CIEP) a letter saying it wanted to preempt M&P’s deal, exercising a right it has under local law.

According to S&P Global, Gabon’s decision to challenge the bid is another sign to investors in the sector of Africa's overall industry restructuring, where governments are seeking more control over their resources. Other investors have expressed concern about the financial and political aspects of the intervention.

In August 2023, Carlyle agreed to accept a $730mn offer from M&P for Assala Gabon and Assala Upstream Gabon. Three months later, the Gabon Oil Company (GOC) declared plans to use its pre-emption rights to buy Assala. President Brice Oligui Nguema aims to gain popularity for the upcoming elections by leveraging energy sovereignty as a potential vote-winner.

Alongside the $730mn in equity needed for the purchase, M&P also agreed to assume $600mn in debt owed by the company. According to S&P Global, the GOC faces significant financial hurdles to meet this bid.

The mature assets owned by Assala demand substantial investment for production upkeep. Discussions with trading houses such as Vitol, Trafigura, and BGN have taken place, but doubts linger about their readiness to take on a $1.3bn risk for marketing 45,000 b/d of crude. Critics argue that pre-emption should not be used unnecessarily for resource nationalism.

In an attempt to dissuade GOC, M&P has started negotiating with the Gabonese government, offering a larger stake to GOC. However, unless GOC secures funds by February, the M&P deal will proceed.