I published an op-ed in Tribune Eco on how the Republic of the Congo sells its oil, and on the discount buyers apply to Congolese crude against Brent.

In brief

• A discount that weighs on the budget. A barrel of Djeno Blend was worth nearly 118 dollars in April and 71 in June. This summer, buyers paid on average more than six dollars below Brent for Congolese crude. The pricing committee, which met in Brazzaville from 7 to 9 October, set an average price of about 54,000 CFA francs a barrel, just over 91 dollars.
• The State loses twice. It takes its share mostly in barrels. The price set by the committee determines how many barrels go to the companies to recover their costs; the sale price obtained by the Société nationale des pétroles du Congo (SNPC) determines what the Treasury collects. When the gap with Brent widens, the State receives fewer barrels and earns less on each one. Oil brings in about four francs in ten of State revenue.
• Selling better rather than producing more. At current output, every dollar recovered on the discount is worth the equivalent of 3,000 extra barrels a day. Producing more takes years of drilling; selling better mostly takes analysis.
• My proposal. A page published every quarter by the Ministry of Hydrocarbons alongside the set prices: for each crude, the number of cargoes and the range of sale prices, plus a comparison with crudes of similar quality, using the Bacon and Tordo method (World Bank, 2004), to separate the part of the discount due to quality from the part due to the sale. The statements of the last five committees are enough to start.

The Congolese State has the authority to set prices. It also needs the capacity to check the sales the companies declare, and that capacity rests on public data. It is the same method I proposed for Socadel in neighbouring Cameroon.

→ Read the op-ed in Tribune Eco