By Neil Ferguson
The small West African nation of Equatorial Guinea is emerging as one of the continent’s major energy players, mainly due to its large oil reserves. Its commercial capital, Malabo, is now actively working to become a continental energy center, demonstrating how the proceeds from a country’s oil and gas reserves can drive economic growth and investment, create meaningful and sustainable jobs, stimulate local skills development and entrepreneurship and provide the necessary social investments which benefit the entire population, such as power, communications, roads and infrastructure.
The country’s oil and gas industry is still relatively young, with Mobil Oil Corporation having first discovered sizeable oil reserves in 1995/6. Since then the country has become a major player in the sector as the third largest oil exporter in Sub-Saharan Africa. It became a member of the Gas Exporting Countries Forum in 2008 before joining the Organization of Petroleum Exporting Countries (OPEC) in 2017. According to Equatorial Guinea’s Minister of Mines and Hydrocarbons, Gabriel Obiang Lima, the country currently produces around 120,000 barrels of crude a day, though at its peak in 2005, before the debilitating drop in oil prices, the country produced 375,000 bopd. As of 2016, the country has estimated reserves of 1,1 billion barrels of oil. Oil production accounts for approximately 78% of Equatorial Guinea’s GDP.
Oil and gas exports are central to the country’s growth and are expected to continue to drive the economy for the foreseeable future. Like many oil-producing countries in Africa, it hopes to reverse systemic declines in production by encouraging exploration and bringing new discoveries online. The country is now also using large-scale gas developments and petrochemical projects that capitalize on its abundant natural gas reserves, to diversify its energy sector. The LNG plant near the capital Malabo on Bioko Island, has a production capacity of 3,4m tons a year. The Government has stated that before the end of the decade, EG will become one of Africa’s first countries to launch a deep-water floating liquefied natural gas terminal when the planned Fortuna FLNG development becomes operational.
While the recent volatility in oil prices has hit the sector hard, it appears Equatorial Guinea has turned the corner, aiming to benefit from its geographical location and facilities to become a regional energy hub. Investment in the development of its upstream sector will see facilities such as the Bioko Oil Terminal, Luba Freeport and REPEGE project all help the country to achieve its goal. It will also be assisted by the recently announced US$2,4 billion in new investment from American firms including ExxonMobil, Kosmos Energy, Marathon Oil Corp and Noble Energy. Eleven new wells are expected to be drilled this year.
Jude Kearney, President of Kearney Africa, Chair of Greenberg Trairig’s Africa Practice and advisory board member at Africa Oil & Power, believes Equatorial Guinea is making all the right moves: “EG Hydrocarbon officials have been fabulously successful in managing this sector for two important reasons. From nearly the beginning of its relationships with outside investors and producers, EG has sought fairness in the treatment it receives from its investors. It has demanded it. Moreover, EG understood at a particular point in the development of the sector that it did not want to be passive in the cycle of production. It wanted to have a commercially sustainable and equitable role in the entire cycle of the country’s use of its reserves,” he says.
Equatorial Guinea has designated 2019 the Year of Energy. The main goal of this initiative is to position the country as Africa’s energy capital, to showcase opportunities offered by the country’s and continent’s energy sector, to promote local companies and the country’s achievements, and to help realize the shared goals of Africa’s oil and gas producing countries.
The highlight of the Year of Energy is the APPO Cape VII Congress and Exhibition, taking place in Malabo between 2 and 5 April, 2019. This major event will be supplemented with several other important gatherings in EG: the 5th GECF Gas Summit taking place in Malebo in November, and the recently announced African Development Bank’s next Annual Meetings in June.
To this end, Equatorial Guinea looks forward to welcoming and supporting Africa’s new petroleum producers, Senegal, Uganda, Mauritania and Mozambique. With these new entrants into the energy space, Africa is further establishing itself as arguably the most significant region in the petroleum sector.