Equatorial Guinea Tackles Economic Impact of COVID-19
Following disruptions to the initial 2020 Year of Investment (YOI) calendar due to the outbreak of COVID-19, Equatorial Guinea’s Ministry of Mines and Hydrocarbons (MMH) has countered with a consolidated schedule of events and an even stronger push for the development of diversified, downstream projects, which could generate revenue and offset crude export losses. The MMH resumed its conversation with foreign investors through the announcement of new dates for the Africa Oil & Investment Forum & Exhibition – now set to take place November 25-26 – during a public webinar hosted in partnership with Africa Oil & Power at the end of April. Under the theme, “The State of Oil Markets and Global Rebound,” the webinar addressed industry-wide challenges created by reduced global oil demand, OPEC-led production cuts and plunging commodity prices, with a strong focus on COVID-19 as an opportunity for local companies to take ownership over the extraction of domestic resources.
Since then, the month of May has seen the MMH be increasingly proactive in its response to the crisis, seeking to keep E&P companies afloat, drive opportunities for local content participation and award key contracts to push diversification initiatives forward. From launching a new local content decree focused on nationalization, to ratifying of a new mining code governing the extraction of mineral resources, to awarding key contracts for a 5,000-bpd modular refinery and formaldehyde plant, Equatorial Guinea is proving that COVID-19 will not prevent the country from driving investment into its most bankable energy projects.
- Aid to E&P: In a decisive show of support to the upstream industry, the MMH announced that it would extend exploration licenses for two years and relax capital expenditure requirements for E&P companies amid the low-price climate and reduction in oil demand caused by COVID-19.
- Local Content Decree: The MMH announced a new measure that seeks to drive participation of the national workforce in the oil and gas industry and translate the country’s economic recovery into local job creation. Ministerial Order 1/2020 establishes the period by which companies can employ foreign labor in the oil and gas sector, with the General Directorate of National Content overseeing companies’ compliance.
- First Mining Contracts: The MMH and Rosgeo signed first contracts for the exploration of mineral and hydrocarbon resources in the Rio Muni basin. Signed with JSC Zarubezhgeologia and JSC Yuzhmorgeologia, international subsidiaries of Rosgeo, for the initial phase of seismic acquisition in transit zone and state geological mapping of the basin. Five further contracts were signed with Manhattan Mining Investment Co., Blue Magnolia and Shefagold.
“We are on track to deliver several projects under the 2020 Year of Investment following the award of the feasibility study for a 5,000 barrel per day modular refinery to VFuels last month, and the award of the feasibility study for the methanol-to-derivatives plant. These are two landmark projects of the Year of Investment that will boost the local transformation of domestic oil and natural gas and create substantial jobs for the country.” – H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons.
INVESTMENT PROJECT SPOTLIGHT: Methanol-to-Derivatives Plant
Moving forward with a critical YOI project,Equatorial Guinea’s MMH and the Atlantic Methanol Production Company (AMPCO) awarded the feasibility study for the construction of a methanol-to-derivatives plant to U.S. software and consulting services company Nexant. Located in Punta Europa on Bioko Island, the formaldehyde production plant will enable Equatorial Guinea to diversify its economy through the creation of domestic industry, as formaldehyde represents a key component in the manufacturing of plastics, clothing, paper and other wood derivatives.
COMPANY SPOTLIGHT: VAALCO Energy
Founded in 1985, U.S. independent energy company VAALCO Energy carries production, development and exploration assets throughout the West African region. In Equatorial Guinea, VAALCO currently holds a 31% participating interest in offshore Block P. As of November 2019, the company has been in preliminary commercial discussions with Levene Hydrocarbon Limited regarding potentially serving as a contract operator for the recently awarded onshore Blocks 3 and 4 and offshore Block 19 in Equatorial Guinea.
UPCOMING YEAR OF INVESTMENT EVENT: AOIF 2020
Africa Oil & Investment Forum & Exhibition, Sipopo Conference Hall Malabo, Equatorial Guinea November 25-26, 2020
As part of the 2020 Year of Investment initiative, the Ministry of Mines and Hydrocarbons will host the Africa Oil & Investment Forum & Exhibition (AOIF) 2020 in Malabo (November 25-26). The two-day conference centers on deal origination and execution, technical presentation of downstream projects and facilitation of investment into the country and the continent, while offering face-to-face interaction with the Minister of Mines and Hydrocarbons and other government officials.