Despite low price, oil production presses on
Even as Equatorial Guinea’s crude trades at 65 percent below its level in October 2014, its leadership is resolved to keep output levels unchanged. Meanwhile, the government is working with operators to allocate more gas capacity at the Punta Europa plant.
Equatorial Guinea’s crude production of 200,000 barrels per day has not changed since oil prices have slipped in the last 16 months. Total liquids production is around 390,000 barrels per day. The country has maintained this plateau because reducing production levels would affect the geology of offshore oil fields.
“Shutting down production is not an option, it will cost us even more,” said H.E. Gabriel Mbaga Obiang Lima, Minister of Mines, Industry and Energy. “Of course we are affected by a low oil price, but we must do what is necessary to support this situation.”
In the new price climate, the Minister has pressed international operators to negotiate contract extensions without production increases. The ministry is negotiating an extension of ExxonMobil’s production sharing contract for the Zafiro Field in Block B, Equatorial Guinea’s largest and longest producing oil field.
“We are definitely looking to extend the contract with ExxonMobil, with conditions of course,” the Minister said.
The Ministry is also ironing out new gas agreements to allocate additional capacity for Marathon Oil’s projects at the Punto Europa Gas Processing Complex. US operator Marathon is one of Equatorial Guinea’s oldest partners, active in gas production, methanol and LNG. The minister said Marathon was interested to expand its involvement to the planned Bioko Oil Terminal and petrochemicals projects.
To accommodate foreign companies affected by the oil price, the ministry has approved extensions of drilling programs to 2017.
“The pressures are real,” the Minister said. “Many companies have reduced their drilling operations and others have completely stopped. The reality is we don’t want them to disappear. Everyone must think long term.”