Blocks Awarded But Output Recovery Still Looks Temporary
Equatorial Guinea's oil minister Gabriel M Obiang Lima has confirmed that news on the latest blocks set to be offered in the country will be made at an annual industry conference in Malabo during June 2013. Lima recently announced the award ing of a number of onshore blocks to both traditional independents and lesser- known players from elsewhere. In April 2013, eight offshore and onshore production sharing contracts (PSCs) were ratified, with players from West Africa, China and Brazil alongside independents from the US scoring blocks. According to Lima, the awards were a reflection of an 'aggressive policy' in licensing that will continue.
Block W (offshore Rio Muni): Murphy Equatorial Guinea Oil (operator), Pan Atlantic Oil and Gas, GEPetrol (the national oil company of Equatorial Guinea).
Block Y (offshore Rio Muni): Xuan Energy (operator), Brenham Equatorial Guinea, Strategic Oil & Gas Resources, Royal Gate Energy, GEPetrol.
Block Z (offshore Bioko Island): Royal Gate Energy (operator), GEPetrol.
Block EG-01 (offshore Rio Muni): G3 Oleo e Gas (operator), GEPetrol.
Block EG-02 (offshore Bioko Island): Pan Atlantic Oil and Gas (operator), Novamark International, Atlas Petroleum, GEPetrol.
Block EG-03 (onshore Rio Muni): Elegance Power (operator), GEPetrol.
Block EG-04 (onshore Rio Muni): Elegance Power (operator), GEPetrol.
Block EG-05 (offshore Bioko Island): Glencore Exploration and Production (EG) (operator).
3D data for additional offshore blocks will be acquired over the coming months and offered later in 2013 according to plans outlined by the ministry. While the awarding of blocks suggests continued interest in the country's mature oil sector, that the PSCs were mostly issued to a number of smaller players - while boding well for the diversity of the sector - could become problematic should these firms lack the financial or technical capacity to fully fund exploration necessary to prove up the country's dwindling reserves.
Although we predict a temporary recovery in Equatorial Guinea's output, led by a ramp up of production from new upstream developments, we believe the falling volumes from mature fields will leave overall production in decline by the end of our forecast period in 2022. Strong interest in West Africa's deepwater plays is expected to continue so long as prices remain supportive - which is our core view at this point - but there are concerns about Equatorial Guinea's business environment that could see investment move elsewhere.
We highlight a recent move by Norway's sovereign wealth fund to consider divesting assets held in firms that continue to operate in the country. The move is an indication that corruption and the poor management of natural resources are of growing concern, with civil society organisation Freedom House ranking the country 'the worst of the worst' civil liberty abusers in a 2012 survey.
|Recovery Is Temporary Making New Exploration Critical|
|Equatorial Guinea Oil Production, 2000-2022 ('000b/d & % chg y-o-y)|