Fuel for Thought
Equatorial Guinea oil and gas industry
Mar 17 2023
Equatorial Guinea is making significant strides towards the recovery of its oil and gas sector, with a focus on local production and participation to drive economic advancement and legislative stability. The country currently produces 244,000 barrels of oil per day and has increased its gas production capacity by 5.73% annually from 2015 to 2018. Equatorial Guinea is expected to continue increasing production levels through new developments and projects.
The upstream sector plays a critical role in the growth of the petroleum industry and the economy, making it vital to establish policies and regulations that promote consistency in economic development. ExxonMobil's affiliate, Mobil Equatorial Guinea Inc. (MEGI), is the country's largest oil producer, while the state-owned hydrocarbon company, Sociedad Nacional de Gas de Guinea Ecuatorial (Sonagas), manages the distribution, marketing, and exploration of natural gas assets, including industrial and residential markets.
As the only Spanish-speaking country in Africa, Equatorial Guinea has experienced the highest growth path on the continent over the last five years. The country has become heavily dependent on oil due to significant discoveries that are structurally altering the economy, and it is among several emerging oil-producing nations reluctant to embrace global aspirations regarding energy transition.
Equatorial Guinea's Hydrocarbons Law, complemented by Regulations on Petroleum Operations and Regulations on National Content, governs the exploration and production of hydrocarbons. Petroleum contracts are negotiated using a model contract developed by the Ministry in charge of petroleum operations and typically take the form of production sharing contracts. The Hydrocarbons Law allows the State to derive value from the development of its oil and gas resources through direct investment or participation interest, royalties, domestic consumption requirements, and taxes.
According to Pablo Mitogo, Attorney at Centurion Law Group, "Africa's oil and gas industry is entering a new era, and Equatorial Guinea is at the forefront."
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