The Oil & Gas Year Equatorial Guinea 2016
Equatorial Guinea’s oil and gas industry has been affected across the value chain by the low oil price environment, while government efforts to increase the proportion of local content in the industry have shaken up the market. Though the upstream sector saw minimal activity in 2016, efforts to localise and diversify are laying the groundwork for the country to benefit significantly when oil and gas prices stabilise.
As with other hydrocarbons-rich countries in the region, the oil price crash has amplified the need to diversify Equatorial Guinea’s economy. GDP growth fell from the 2012 high of 5.7% to a contraction of 12.2% in 2015, a direct result of oil-dependency: some 77% of Equatorial Guinea’s GDP in 2016 came from the oil and gas industry.
Government-led efforts to diversify via its Horizon 2020 plan, phase two of which began in 2012, have started to develop a more sustainable economy by encouraging growth in agriculture and tourism, as well as by pushing for downstream development and the monetisation of the country’s gas reserves. Key to this effort are projects such as the Punta Europa gas complex, already a significant regional gas hub, and the Bioko Oil Terminal, both of which will establish the country as a regional energy exporter. Though the low oil price has caused delays on the Bioko Oil Terminal project, Horizon 2020 outlines a long-term energy vision to which the Government of Equatorial Guinea remains committed.
In this climate, only one company took the risk of drilling offshore Equatorial Guinea in 2016. G3 Óleo e Gás struck paydirt on the Sothis prospect in Block EG-01, but the details have yet to be announced. While exploration has all but ground to a halt, companies already in production have had to adapt, making operations leaner and extracting maximum value from resources. Marathon Oil saw first gas off its newly delivered Alba B3 compression platform, which will extend the lifeline of the Alba field significantly. Ophir Energy’s Fortuna FLNG project, Africa’s first floating LNG vessel, is in the pipeline with first gas expected in 2020. Projects such as these look set to work in tandem with efforts in the services sector to maximise efficiency and create a more robust hydrocarbons industry.
The Ministry of Mines, Industry and Energy released local content regulations in 2014, stipulating that these were to be fully enforced in 2016. In 2016 the ministry was split into two, the Ministry of Mines and Hydrocarbons (MMH) and the Ministry of Industry and Energy. The task of enforcing local content law in the oil and gas industry has been taken up by the MMH, under the leadership of Minister Gabriel Mbaga Obiang Lima, previously Minister of Mines, Industry and Energy. The regulations require companies to employ Equatoguineans or other African nationals, to award contracts to local and African companies, and to use local goods and services wherever possible. They also require companies to set up corporate social responsibility programmes and to actively contribute to the training and education of Equatoguineans.
Reactions to the newly enforced rules have been mixed, particularly as the low price of oil has significantly reduced revenues in the upstream, downstream, and services sectors. However, the MMH, under the leadership of Minister Obiang Lima, has not been swayed from its commitment to create a thoroughly homegrown industry. A new campus for the Instituto Tecnológico Nacional de Hidrocarburos de Guinea Ecuatorial is to open in early 2017 in Mongomo, providing the country with a dedicated training centre for Equatoguineans entering the hydrocarbons industry.
The Oil & Gas Year Equatorial Guinea 2016 analyses the implications of Equatorial Guinea’s changing hydrocarbons landscape as the country works to solidify the benefits of its rich oil and gas resources despite the low oil price environment. Top industry insiders were interviewed for the book including Minister of Mines and Hydrocarbons Gabriel Mbaga Obiang Lima; former general director for hydrocarbons at what was then known as the Ministry of Mines, Industry and Energy Mercedes Eworo Milam; chairman of Banco Nacional de Guinea Ecuatorial Martín-Crisanto Ebe Mba; and all the key players from upstream to downstream operating in the country.
Extensive analysis is backed with meticulously researched maps, illustrations and graphs to create a market guide indispensable for players seeking to make a move in Equatorial Guinea.