Equatorial Guinea warns of African asset grab by oil majors

Equatorial Guinea warns of African asset grab by oil majors


The return of oil majors to African exploration projects as upstream spending recovers threatens to slow down, rather than accelerate, the pace of new finds in the region, Equatorial Guinea’s energy minister has warned. With oil prices recovering to $70/b this year, interest in Africa’s oil and gas potential has been reignited, with profit-making oil majors picking up exploration acreage abandoned by less cash-rich independents.

But oil majors can often take longer to assess, prioritize, execute and appraise frontier exploration drilling compared to more nimble, tightly focused independent explorers, Gabriel Mbaga Obiang Lima told S&P Global Platts. “Majors are like big elephants, they are very slow.

That means that the development of fast-tracking initiatives will slow down,” he said on the sidelines of an oil conference in Cape Town. Acknowledging that deep-pocketed global oil majors are well suited to developing existing discoveries, he said the return of oil and gas “superpowers” to African exploration drilling makes less sense. “Majors have big portfolios and take time to evaluate, they definitely slow down exploration, that’s the negative part.”


Oil majors have emerged leaner and cash-flow positive from the downturn, and competition is heating up for quality exploration acreage to rebuild resources depleted during the spending slump. Last October, Total took a majority stake in a Namibian block, and one in South Africa, from UK-based independent Impact Oil and Gas. Shell secured its first exploration acreage offshore Mauritania in July while ExxonMobil acquired stakes in Namibian fields from both Portugal’s Galp in February and from minnow Azinam in August.

Meanwhile Total has consolidated its position in Uganda’s maiden oil fields in recent years while BP is building its African natural gas assets in Egypt, Mauritania and Senegal. “What are the majors like Total, Exxon, Shell seeing that the rest of us are not? The independents are leaving but the majors are coming back, and are coming very aggressively,” Obiang Lima said. In Equatorial Guinea, ExxonMobil is still assessing the commerciality of its Avestruz oil find announced in late 2017, which lies close to the oil major’s Zafiro field in Equatorial Guinea’s northern maritime area.


Equatorial Guinea became OPEC’s smallest producer, behind its neighbor Gabon, in May last year and is currently pumping around 120,000 b/d of crude, according to S&P Global Platts estimates. But the Central African country is struggling to halt the decline in its oil production with new projects to offset an average 10% annual decline in output from its existing fields. Obiang Lima said he expects the country to be producing “at least” 120,000 b/d of crude in 2020 but is looking to new discoveries to boost the figure. Including condensates from its gas-rich producing fields and LNG, which don’t count under OPEC production targets, Obiang Lima said the country is producing a total of around 300,000 b/d of oil equivalent.

He said Equatorial Guinea will launch a new exploration bidding round in January next year in the hope of attracting new upstream spending across the country’s oil and gas basins. Companies with existing upstream acreage in the country, which include ExxonMobil, Kosmos, Ophir, Marathon, and Noble Energy, will also be expected to commit to more spending as part of upcoming license extension talks, he said. “We need someone to go into the next cycle. We need to drill, that’s the only way and we want companies that are willing to do that. If you want to be in Equatorial Guinea, you drill. If you don’t want to drill, we’ll look for someone else,” he said. Equatorial Guinea began producing oil in 1995 and saw its production peak at 425,000 b/d in 2004. Before joining OPEC, Obiang Lima had said he hoped the country could recover its oil production to around 300,000 b/d by 2020, before raising it to 500,000 b/d within five years.

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