Since the early 2000s, West Africa has gradually become one of the most
most attractive in the world oil industry, with extensive exploration campaigns in Senegal,
Mauritania, Ghana, Gambia, Guinea-Bissau, etc. If these campaigns have made it possible to reveal
huge oil and gas reserves in Senegal, Ghana and Mauritania, for example, some
countries in the region seem to have been forgotten. This is the case of Benin, a former oil producer and whose
sedimentary basin includes oil trends that extend into Nigerian waters, in the heart
large production basins. Focus on Benin's oil sector, long abandoned by
the industry, but which is worth the detour…
Formerly producer
Between 1982 and 1990, Benin was an oil producing country with a marginal yield of 8000 barrels
per day obtained on the Sèmè block, off the town of Sèmè-Podji, not far from the maritime border with
Nigeria. A result obtained after several exploration campaigns carried out offshore during
the second half of the 1970s.

Beninese blocks 1 and 4, near the most prolific Nigerian fields.

Between 1982 and 1986, production was carried out by the Norwegian company Saga Petroleum, within the framework
a service contract signed with the Beninese State. From 1986, the contract was transferred to the company
American-Swiss Panoco.
To finance its budget, the country increasingly depended on revenue from the marketing of
its oil.
To finance its budget, the country increasingly depended on revenue from the marketing of
its oil. The loans which were granted by the players in international finance were guaranteed by
the oil. However, the agreement with Panoco was shattered after three years when the loans granted to the
Benin were frozen because the company could not provide statements and financial capabilities
satisfactory. Public opinion at the time questioned the responsibility of the leaders, because of the opacity
surrounding the management of the oil windfall.
Since this is a marginal production, the international companies have not shown any
interest in the perimeter. A situation that forced Benin to regain control of production.
However, the company very quickly failed due to the lack of operational and technical capacities. He
must be remembered that this production was refined abroad, and not devoted to the satisfaction of the
domestic demand.
After this setback, Benin never again undertook development work in the upstream oil sector. The
revenues from cotton and oil palm having very quickly replaced those previously recorded in the
petroleum sector. But in 2006, with the coming to power of President Boni Yayi, Benin undertook, as
several other African countries then, to attract investment in exploration.
Traces of oil
In 2006, the Beninese government, concerned about the diversification of its revenue, opened negotiations
with many foreign companies in the sector. The American company Kosmos Energy, already
present in the offshore of several countries in the Gulf of Guinea, was the first to express its interest in Benin's offshore. The American firm has mainly collected important seismic data offshore.
Other companies such as the Nigerian South Atlantic Petroleum (Sapetro), the Anglo-Dutch Royal Dutch
Shell, the Brazilian Petrobras, then Hunt Oil and Oranto, NS Oil, Elephant Oil and Signet Petroleum among others,
began exploration activities in 2008. Work spread over blocks 1 and 4 to the south-east of
Cotonou.

March 2013: South Atlantic Petroleum (Sapetro) invests in Benin's offshore.

In October 2013, Sapetro discovered a crude deposit of 87 million barrels on the perimeter on the
adjacent block 4 which it controls with Petrobras and the public oil company CBH.
In October 2013, Sapetro discovered a crude deposit of 87 million barrels on the perimeter on the
adjacent block 4 which it controls with Petrobras and the public oil company CBH.
The announcement was then made on public television by President Boni Yayi himself. On this occasion,
the then Minister of Energy, Barthélemy Kassa had promised that "the country would soon mark its return
in the group of world oil producers. According to the site development plan, the
production should be spread over fourteen years with an average plateau of 7,500 barrels per day.

October 2013: Senator Daisy Danjuma, from Sapetro, received by President Boni Yayi.

Very committed and confident in the promises of the oil companies, President Boni Yayi declared on the 24
April 2014, during the International Conference on the Energy, Mining and Petroleum sectors: "the
Benin is at the heart of a major offshore oil province”.
A few months later, the euphoria of the discovery was dampened by the announcement that the discovery
is not commercially viable. This news also disappointed Sapetro and its partners, who slowed down
their ongoing activities on Block 1. On the government side, the hard work has waned. The
authorities were unable to produce the necessary maps to build on this failure and promote the basin
sedimentary. Since 2016, Benin's efforts to reposition itself in this market are still pending
on the ground, but the executive is working to redefine the legislative framework for a better attack on the sector.
A new petroleum code
Since the failure of the Yayi Boni regime's oil breakthrough, the lines have moved only timidly,
even if we must welcome the adoption, last year, of a new petroleum code. The code provides for a regime of
production sharing contract and only applies to upstream operations.
Since the failure of the Yayi Boni regime's oil breakthrough, the lines have moved only timidly,
even if we must welcome the adoption, last year, of a new petroleum code.
According to the new law, exploration authorizations are for an initial period of 4 years onshore and 6 years
at sea and can be renewed twice: first for 3 years, then for a maximum of 2 years. The duration
research will therefore be 9 years onshore and 11 years offshore.
The sharing of profits between the oil companies and the government of Benin will be defined, without
surprise, in the standard agreement model. The Republic of Benin will be entitled to a royalty which will be calculated
according to market prices. Various other taxes and duties will be applied although companies
will have to pay part of the production instead of income tax, with minimum rates
40 to 45% depending on the offshore or onshore nature of the field. A signing bonus will be due upon
conclusion of the production sharing agreement, as well as an operating bonus, when the
production permits. As far as local content is concerned, all development plans will have to
to mention.
In addition, the government has set up a Support Unit for the Management of Petroleum Affairs
(UAGAP) whose mission is to assist the Ministry in charge of Hydrocarbons in the management of
oil companies. To this end, it is responsible for studying the files and giving advice to the Minister; design, in
liaison with the structures of the ministry, the policies and strategies for dismantling platforms outside
operation; follow up on contracts in progress, in liaison with the structures of the ministry in
charge of Hydrocarbons; develop government policy and strategy for the petroleum sector;
develop the short and medium term action plan for the oil sector; propose any other action that may
contribute to the development of the oil sector.

Block B could house a reserve of more than 200 million barrels.

If very little information is available on Benin's new oil policy, we can see
a strong desire to launch a license cycle over the next few years and to promote a
complete exploration of the Beninese sedimentary basin.
Outlook
In March 2019, the British exploration company United Oil & Gas signed an optional agreement with the
American company Elephant Oil for a 20% stake in the production sharing agreement
covering exploration block B, west of Cotonou.
If United elected to exercise this option, the company would participate in the production sharing contract at
20% and would be responsible for funding 30% of non-drilling costs and 20% of
drilling costs of phase 1 of the work program. Under the terms of the agreement, United agreed to
fund passive seismic surveys and field surveys worth up to $0.18 million
dollars.
Block B could, according to previous campaigns carried out in the area, house a reserve of more than
200 million barrels. It is located west of Cotonou, in the bay of Dahomey; an area where no wells
has not been drilled to date.
Block B could, according to previous campaigns carried out in the area, house a reserve of more than
200 million barrels. It is located west of Cotonou, in the bay of Dahomey; an area where no wells
has not been drilled to date. It covers an area of ​​4590 km2 and extends to the border with Togo.
According to the Benin Plus news site, seepage of oil and gas has been recorded in
water wells located within the block. Thus, in the northeast of the region, it has been reported the migration of oil to the
continuation of a stratigraphy of block B. There would be on site a thick layer of fluvio-deltaic sandstone of the
Turonien, according to the French geophysical firm CGG, which adds that the area could harbor more oil
provided that.