From LNG Exports to Economic Transformation: Rethinking Cameroon’s Natural Gas Strategy

By Salim Ahmed Vessah

Executive Summary

The Hilli Episeyo floating liquefied natural gas (FLNG) facility has enabled Cameroon to commercialize offshore gas and enter international LNG markets since 2018. Developed by Société Nationale des Hydrocarbures (SNH), Perenco, and Golar LNG, its capacity increased from 1.2 to 1.4 million tonnes per annum (mtpa) in 2022. This model is entering a period of transition. Golar’s contract for the Hilli Episeyo expires in July 2026, after which the vessel will be redeployed to Argentina. Without alternative liquefaction capacity, Cameroon risks temporarily losing its current LNG export capability and associated revenues, unless replacement infrastructure is secured promptly. The impact extends beyond energy. Hydrocarbons are crucial to Cameroon’s public finances. Government projections show a 24.6% contraction in oil and gas activity by 2027 due to declining production before new fields become operational. The post-Golar transition exposes Cameroon to risks from declining production, infrastructure concentration, and reliance on external operators. However, this transition also presents an opportunity. Instead of merely replacing the Hilli Episeyo, Cameroon should re-evaluate how natural gas drives economic transformation. The goal should be to combine continued LNG monetization with increased domestic gas use for electricity generation, fertilizer production, manufacturing, and other industrial activities. Therefore, Cameroon should shift from a narrow LNG-export strategy to a diversified gas strategy that integrates export earnings, domestic value creation, and stronger fiscal resilience.

Key Messages

• The fiscal implications extend beyond the mechanical loss of LNG revenues; declining gas activity could strain already constrained public finances.
• Replacing the Hilli is necessary to maintain export capacity, but simply replacing the vessel will not resolve the structural vulnerabilities of Cameroon’s gas model.
• Natural gas should increasingly support domestic industrialization, electricity generation, and productive investment.
• Hydrocarbon revenues should be managed more strategically to build fiscal buffers and reduce Cameroon’s exposure to commodity cycles.

Introduction

For eight years, the Hilli Episeyo has been central to Cameroon’s emergence as an LNG-exporting country. Commissioned in 2018, this floating liquefied natural gas (FLNG) vessel allowed Cameroon to monetize offshore gas resources without developing a conventional onshore liquefaction plant. Operated through an arrangement involving Golar LNG, Perenco, and Cameroon’s National Hydrocarbons Corporation (SNH), the facility initially produced around 1.2 million tonnes of LNG per year, with its contracted capacity later increasing to approximately 1.4 million tonnes.

That chapter is now closing. Golar’s fleet information indicates that the Hilli Episeyo’s Cameroon contract ended in the second quarter of 2026, after which the vessel was redeployed to Argentina under a new long-term arrangement with Southern Energy. This departure comes at a critical moment for Cameroon. Government projections indicate that oil and gas activity could decline by 24.6% in 2027 before recovering as new production comes online. This decline reflects broader pressures, including the depletion of mature hydrocarbon fields, and should therefore not be attributed solely to the Hilli’s departure. Nevertheless, the loss of Cameroon’s existing LNG export facility adds another layer of pressure to a sector already facing structural production challenges.

The central question, therefore, is not simply how Cameroon can replace the Hilli. It is whether the country should use this transition to rethink its objectives for its natural gas resources. Cameroon needs a gas strategy that simultaneously protects export earnings, strengthens domestic energy security, supports industrialization and reduces fiscal vulnerability.

When Golar Leaves: What Is at Stake for Cameroon?

The departure of the Hilli Episeyo represents a significant change in Cameroon’s gas landscape. The vessel became the country’s principal LNG export platform and, according to Golar, helped establish Cameroon as the world’s twentieth LNG-exporting nation in 2018. Its departure therefore creates an immediate monetization challenge. Unless alternative liquefaction capacity is secured, Cameroon risks losing its existing LNG export channel. Recent reporting indicates that the Hilli’s departure effectively ends Cameroon’s current LNG production, with no replacement liquefaction facility yet operational. The consequences extend beyond the LNG industry. LNG exports generate foreign exchange and contribute to economic activity through upstream production, maritime services, logistics and associated supply chains. Their interruption could therefore affect export earnings and the broader contribution of gas to the economy.

However, the more important issue is concentration risk. Cameroon’s LNG model has depended heavily on one floating facility. This provided a relatively flexible and cost-effective entry into LNG markets, but it also created a structural vulnerability: when the facility leaves, the country’s existing LNG export capacity disappears with it. This vulnerability is occurring alongside a broader decline in the hydrocarbon sector. Cameroon’s government expects oil and gas activity to contract sharply in 2027, while a subsequent rebound is anticipated as new projects and fields come into production.

The policy challenge is consequently larger than Golar. Cameroon needs to manage the transition between mature hydrocarbon assets and new sources of production while ensuring that gas resources continue to generate economic value. The Hilli experience nevertheless provides an important lesson: gas monetization infrastructure matters as much as gas reserves themselves. Having resources underground does not automatically translate into exports, fiscal revenues or industrial development. Cameroon must therefore ensure that its future gas strategy is supported by reliable infrastructure, adequate investment and commercially viable routes to market.

Several options deserve consideration for a post-Golar strategy. First, secure a replacement floating LNG (FLNG) facility to maintain offshore gas exports and leverage existing infrastructure. Second, expand offshore gas gathering, processing, and transportation infrastructure to support new developments and improve the commercial viability of future gas fields. Third, consider phased development of onshore liquefaction capacity, which could generate stronger domestic economic linkages and support downstream industrial activities, despite higher capital investment and longer timelines. Finally, Cameroon could explore regional gas commercialization and export partnerships, including cross-border infrastructure where justified. Each option involves different costs, risks, and challenges. The strategic objective should be to identify the solution that best balances fiscal returns, energy security, domestic value creation, and long-term national development priorities, rather than simply restoring export capacity quickly.

Fiscal Resilience Under Pressure

The LNG transition will significantly impact public finances because hydrocarbons are a major source of government revenue. In 2023, SNH transferred approximately CFAF 425 billion to the State, highlighting the sector’s fiscal importance. However, this figure represents broader hydrocarbon transfers, not solely LNG revenue. The departure of the Hilli does not automatically reduce government revenue by a corresponding amount; the fiscal effect depends on production volumes, gas prices, contractual arrangements, operating costs, alternative gas projects, and other hydrocarbon activities.

The timing of these changes is concerning. A projected 24.6% decline in oil and gas activity in 2027 could strain public finances, especially if new projects do not offset declining production from mature fields. The core issue is fiscal dependence and volatility. When government revenues are tied to hydrocarbons, declining production or lower international prices can quickly reduce fiscal space. This is problematic when resource revenues fund recurrent expenditure rather than investments that generate future economic returns. Cameroon must strengthen fiscal resilience before hydrocarbon revenues become less predictable.

This requires improved revenue forecasting, greater transparency in resource revenues, prudent expenditure management, and mechanisms to smooth commodity cycles. Crucially, Cameroon should use remaining hydrocarbon revenues to accelerate diversification, not deepen dependence on extractive activities. The goal should be to transform temporary resource income into permanent productive assets such as infrastructure, electricity, human capital, industrial capacity, and institutions that can generate growth after hydrocarbon production declines.

Turning a Challenge into a Strategic Opportunity

The post-Golar transition should not be viewed simply as a loss of LNG capacity, but as an opportunity to rethink how Cameroon monetizes its gas resources. The immediate priority is to develop a credible post-Golar strategy that assesses alternative LNG solutions alongside other gas monetization options. This strategy should consider not only the speed and financial viability of replacing existing capacity, but also the extent to which new projects can strengthen energy security, domestic value creation and national participation in the gas value chain. The objective should therefore be to build a more diversified and resilient gas sector rather than simply replace the Hilli Episeyo with another vessel.

At the same time, Cameroon should place greater emphasis on domestic gas utilization. Expanding gas-fired electricity generation could help address persistent power constraints, while affordable and reliable gas supplies could support energy-intensive industries. Opportunities in fertilizer production, cement manufacturing, agro-processing, petrochemicals, industrial heat, and gas-fired electricity generation could create stronger linkages between the gas sector and the wider economy. These sectors have the potential not only to increase domestic value addition, but also to reduce production costs, improve competitiveness, and support employment creation across multiple value chains. This would allow Cameroon to capture greater value from its natural resources rather than relying predominantly on raw or semi-processed exports.

Gas development should also be integrated into a broader industrialization strategy. New projects should be assessed according to their contribution to local employment, skills development, domestic procurement and industrial linkages, alongside their export revenues. Such an approach would ensure that gas investments generate wider economic benefits and contribute to structural transformation.

Finally, Cameroon needs to use the remaining window of hydrocarbon revenues to accelerate economic diversification. Rather than allowing gas revenues to finance recurrent expenditure without creating lasting productive capacity, a greater share should support infrastructure, human capital, agriculture and agro-processing, manufacturing and digital services. The objective should be to transform temporary resource revenues into productive assets and sustainable sources of future growth.

Policy Recommandations

• Establish a comprehensive post-Golar gas strategy: Develop a clear post-2026 roadmap covering alternative LNG capacity, upstream development and other gas monetization options while reducing dependence on a single infrastructure arrangement.
• Prioritize domestic gas utilization: Expand the use of natural gas in power generation and strategically selected industries, particularly fertilizers, petrochemicals and manufacturing, to increase domestic value creation.
• Strengthen hydrocarbon revenue management: Improve revenue transparency, forecasting and stabilization mechanisms to reduce the fiscal vulnerability associated with production and commodity-price volatility.
• Link gas revenues to economic diversification: Channel a greater share of resource revenues towards productive investments in infrastructure, human capital and non-extractive sectors.
• Develop a gas-to-industry framework: Identify priority sectors such as fertilizer production, petrochemicals, cement manufacturing, agro-processing, and gas-fired power generation where domestic gas can be used competitively. Establish targeted incentives for private investment, local supplier participation, skills development, and value-chain integration.

Conclusion

Golar’s exit is a strategic inflection point for Cameroon’s gas economy. The Hilli Episeyo demonstrated Cameroon can successfully monetize offshore gas and participate in international LNG markets. The next challenge is to build a less concentrated, more resilient model generating greater domestic value. Replacing the Hilli may be necessary to preserve LNG export capacity, but it shouldn’t be the end of the strategy. Cameroon should simultaneously expand domestic gas utilization, support gas-based industrialization, strengthen hydrocarbon revenue management, and accelerate economic diversification. The post-Golar transition can therefore become either a source of vulnerability or an opportunity for strategic renewal. Cameroon’s objective should not simply be to replace lost gas exports but to ensure every unit of natural gas generates greater, more sustainable economic value. The ultimate measure of success will not be whether Cameroon replaces one LNG vessel with another, but whether its natural gas resources generate lasting gains in energy security, industrial development, employment creation, and fiscal resilience. The post-Golar transition should therefore be viewed not only as an infrastructure challenge, but as an opportunity to reposition natural gas as a driver of long-term economic transformation.