In pursuit of becoming a regional Gas Mega Hub, Equatorial Guinea has emerged as a highly competitive oil and gas destination, with the acceleration of large-scale project developments and introduction of regional partnerships driving socioeconomic development both domestically and regionally. During a roundtable interview discussion organized by the African Energy Chamber (AEC), H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons, Equatorial Guinea, and H.E. Didier Budimbu Ntubuanga, Minister of Hydrocarbons, the DRC, provided insight into their respective sectors, with H.E. Minister Lima detailing his ministry’s targets, OPEC production trends and investment in Africa.
How is Equatorial Guinea fast tracking hydrocarbon developments?
We are promoting investments not only in exploration but also in transportation and in the downstream sector. What is happening in Europe has given us a new view of how important hydrocarbons are for our continent. Gas is going to be an important part of Africa’s energy mix and central Africa will play a key role in ensuring energy security across the continent. That is why we are starting to work together with the DRC, Chad and Guinea to create a gas market and to develop the infrastructure to transport gas and methanol.
My priority remains our Gas Mega Hub and we are working with Nigeria and Cameroon to make Punta Europa the central area of processing and exporting gas. Hopefully by October this year we will be announcing new agreements on this. The revolution from oil and gas is happening and that is why we are working with our neighbors to ensure we capture the trapped gas.
ExxonMobil has been trying to adjust its position on the Zafiro field for a number of years. Could you outline the status of this positioning, and can you confirm the FLNG scheme that is being proposed?
Zafiro has been a jewel for us and clearly provides revenue for Equatorial Guinea. The issue that ExxonMobil has is that its contract expires in 2025. When the contract expires, that asset will go to the state. What we are doing at this stage is engaging with ExxonMobil to see if we can have a mutual agreement that will maintain their investment and exploration. Regarding Fortuna, we all recognize the challenge of FLNG. We have different parties interested and are working on possible projects. By October I will be able to be more specific, but we believe that Equatorial Guinea will go into FLNG.
There have been demands from western countries for OPEC members to increase production. What is OPEC’s stance on this?
For almost two years since the start of COVID-19 and the drop in oil prices, OPEC producers have been cutting costs and not maintaining infrastructure. It is not simple to keep the costs down as well as to agree to calls to expand production. Equatorial Guinea alone has 54 wells that are shut down and ones we need to do maintenance on. The increases in oil prices have nothing to do with production, they have everything to do with geopolitics. I do not see us changing or increasing production due to geopolitics.
There has been a shortfall in production by OPEC+ members. Given the shortfalls, why should OPEC+ be regarded as credible in managing supply?
One of the reasons that OPEC+ was created was due to the volatility of prices. Now, through OPEC+, we are able to gather information on what is happening and work together to control and keep prices down. The only drop in production was due to COVID. We have achieved a huge milestone of keeping prices between $50 and $60 per barrel for a long period, a development that was good for the economics of many countries.
With Russia under western sanctions and its exports expected to decline, is the country still a useful partner for OPEC+?
OPEC+ is a voluntary organization of a number of producing countries. Before COVID, we had other countries like Nigeria and Libya who had serious problems such as political instability that resulted in the manipulation of pipelines and reductions in production and exports. All these issues resulted in volatility of prices at global scale. It is not a decision of the organization to decide who can be a member and who should not be.
Do you believe Europe will increasingly look for gas from Africa and do you need these investments to develop gas faster?
When people say replace Russian gas, we are talking about decades of infrastructure development. It is going to take billions of dollars and a long time to build the infrastructure needed. Also, Equatorial Guinea has long-term clients who have paid for the infrastructure that we are using, and we cannot just say goodbye to them. If Europe is willing to help us develop the market, we are more than happy to give them our excess gas. First priority should be to supply Africa. We have gas reserves, but we do not have adequate energy supply across the continent. Countries like South Africa, Egypt and Morocco need gas but we can’t supply to them because they do not have terminals and we need to build them.