Oil and gas firms get two-year extension for exploration in Equatorial Guinea
After considering the consequences of the COVID-19 global pandemic on oil prices and African economies, the Ministry of Mines and Hydrocarbons (MMH) of Equatorial Guinea has signed a ministerial order granting oil and gas companies a two-year extension on their exploration programmes.
The African Energy Chamber said on Monday that the MMH would also provide flexibility on the work programmes of producing companies to ensure growth and stability in the market.
By allowing for the deferral of some work programs, companies can readjust their expenditures and project’s execution accordingly, and plan for more efficient investments as markets continue to recover.
Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons, said: “The MMH remains concerned about the resounding impact of the drop in oil prices, COVID-19 and its dramatic consequences on our hydrocarbons industry. At a time of great uncertainty, we have an obligation to make bold, decisive, and pragmatic policy decisions to get the industry moving again.
“Our government is fully committed to safeguard our local oil and gas industry, its companies, and its employees. The granting of these extensions has been deemed suitable to create an enabling environment for international and African companies to keep investing in Equatorial Guinea and ensure a quick recovery of our industry”.
The MMH will also continue working with oil companies benefitting from such incentives to make sure that the recovery of the country’s oil sector is made on the back of local content promotion, increased technology transfers, and procurement of additional local goods and services.
The Chamber added that particular emphasis would be put on educating, training, and promoting the local workforce to help further reduce operational costs for international companies while maximising the creation of local value and revenue.
New measures to help landmark projects
These proposals, according to the African Energy Chamber, maintain and guarantee existing investments into Equatorial Guinea, while empowering local companies to assist their foreign partners in safeguarding and increasing their operations in the country.
Some of these companies notably include ExxonMobil, EGLNG, Marathon Oil, Atlas Petroleum, Kosmos Energy, Noble Energy, Glencore, Royal Gate Energy, Gunvor, and Trident Energy, among others.
These measures are being rolled out as Equatorial Guinea implements a series of landmark projects across its upstream, midstream, and downstream industries.
The backfill project is already ongoing to pool supply from stranded gas in the Gulf of Guinea and replace declining output from the Alba Field.
Meanwhile, the ongoing Year of Investment has generated strong interest from various existing and new players in Equatorial Guinea to build and expand midstream and downstream infrastructure and maximise local processing and transformation of domestic crude oil and natural gas.
Coupled with a friendlier business environment and market-driven policies allowing companies to operate amidst current market conditions, Equatorial Guinea is positioning itself for quick recover and laying the bases of strong economic growth in the years to come.
Benefit for American & African independents
In a statement on Tuesday, NJ Ayuk, executive chairman at the African Energy Chamber, said: “Equatorial Guinea has adopted a market-driven attitude and approach to the current industry challenges, which we believe is a winning strategy to ensure a quick recovery of our economies.
“We strongly encourage neighbouring countries to continue their efforts and work with local and international companies to put the right measures in place to support their own industries”.
According to the Chamber’s announcement from Tuesday, American independents are particularly excited about these new measures.
Namely, Vaalco, which holds a 31 per cent working interest in Block P, has now a chance to properly regroup and plan for an on-track development of the acreage. Similarly, Kosmos Energy, operator of Blocks W, EG-21, and EG024, can now continue to study the block’s geology under a revised timeline and plan for additional surveys and drilling expenditure on a regional level.
As the backfill project continues offshore, the Chamber believes that Noble Energy will also welcome such policies that give more flexibility in the exploration and production of offshore gas in the country.
On the other hand, African independents like Atlas Oranto Petroleum will also continue doing work on Blocks H and EG-02.
Such acreages contain deposits and fields that have large hydrocarbons prospects comparable to those discovered in Guyana by ExxonMobil.
Mapping of key horizons within EG-02 is now completed and the block promises a strong potential after completion of pre-stack simultaneous inversion, coherency, and spectral decomposition processing.
Results have been very encouraging and a major upper Cretaceous deep-water fan system has been identified, with Guyana’s Liza field as a potential analogue.