With more than 1.1 billion barrels of oil reserves and 1.5 trillion cubic feet of natural gas, the small but formidable nation of Equatorial Guinea is ambitious in its plans to position itself as a major African hydrocarbon hub.
In an exclusive interview with the African Chamber of Energy (www.EnergyChamber.org), HE Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, provided updates on the country’s oil industry and how the government is driving growth and natural gas development.
What needs to be done to position Africa as a competitive gas economy?
That answer is very simple: infrastructure to import and export gas. I always give the same example of how we supply LNG to South Africa, Morocco and Ghana. Every time I go to those countries, I find that even if I forced a company to send LNG cargo, they would not be able to receive the cargo. There is no port or terminal in Morocco, South Africa or Ghana that can receive the ship. The infrastructure is going to be critical. Investors in Europe may be selling solutions to be able to put in as many terminals as possible, which will allow us to export gas to them. That is what we need to be competitive in gas.
How will the recent European Union decision to label certain gas projects as green affect gas-producing states like Equatorial Guinea?
I think it’s very good. Equatorial Guinea has an ambitious project called Gas Mega Hub of Equatorial Guinea. The hub’s vision is to create Equatorial Guinea as a hub to receive gas, not only from Equatorial Guinea but also from Cameroon and Nigeria. All that gas is a way to give back to those countries. All that development requires investment. As the country that is creating the project, we need investors. Those investors will not only be African, but they will also be American, Asian and European because they have a lot of experience. If those Europeans have many restrictions when it comes to investing in gas, there will be problems. Many of those Europeans will be very interested in participating when they see what we are doing.
Regarding the Gas Mega Hub, how do you see the initiative of this project by neighboring countries like Nigeria and Cameroon, who are trying to get gas offshore?
The only thing I am referring to is the uncommitted gas and the long-term distant initiative. That is why the NNPC and the private owners of that gas are very happy. They see that there is a good reception and that we are very clear that we are not there to challenge Nigeria LNG. The same thing happened in Cameroon. When you go to Cameroon you talk to them and you understand. The beauty of the mega gas hub is that when you ship your gas, it’s turned into LNG so you can get the amount you need for power, but if you don’t need it for power, you can take it for private investors and make money on it. Gas owners always get paid. There’s no way to get lost.
We have been waiting to hear about the Zafiro field and its development. Can you give us an update and how the government plans to handle it? How will it increase production and efficiency?
When it comes to Sapphire, we’re not going to reinvent the wheel or do something that’s never been done. The Sapphire has been made in Malaysia, Norway, Venezuela and many other places. All we have to do is study the options. Nobody is going to come and buy an asset that they have to return to me in two years. Asset transfer is the solution, but we must do it correctly.
Can you give an update on the status of the new effort to build the refinery?
The refinery has different problems. The first is the raw material. The second topic is the financing of the infrastructure, which is not a problem because we can provide the money or the partners. The last issue is commercial viability to make sure the project is going to make money. If we did that project a year or two ago, it would make sense. Right now, we have a situation where the price of oil is high and there is no sense that the price of oil is going to go down. Right now, doing a small-scale petrochemical or small-scale refinery would still be a big challenge for commercial effect. We are working on the commercial part. The whole project is ready and we can start it at any moment, but I need to be convinced that the commercial aspect is correct.
There have been rumors that you have signed an agreement with an American company to develop the Fortuna FLNG project, can you expand on this and when can we expect more details?
As for Fortuna, it’s a project that a lot of people know about as a big oil and gas discovery. We have been working with a company to be able to present a development plan in that field. We have had very good progress. We need to make sure we have an exploration partner that will not only develop Fortuna, but will continue to drill to develop more oil and gas in the region. That part is pending. We hope to close it by the end of this year. When we do, we will announce it. Regarding your comments about the American company, it is correct. That’s all I can say.
What is the position of Equatorial Guinea regarding renewable energy and issues such as energy transition and climate change?
As I always say, the transition must happen everywhere. All countries must do so, including Equatorial Guinea. We need to gather the right technology for the country. Country by country there is some technology that makes sense and other technology that doesn’t. For example, one of the technologies that I am open to for Equatorial Guinea is hydrogen. We may bring in hydrogen to see how we can take advantage of hydrogen opportunities with our other facilities. We need to think about not only investing in that technology, but also making sure that we have a market for it.
What deals do you expect to see signed at African Energy Week 2022?
I am very convinced that gas projects will be signed there. I am preparing and working very hard. The oil projects will be very challenging because most of the licensing round will be next year. I won’t be surprised. Gas projects will be critical and asset transfers will be my talk at Africa Energy Week. I’ll talk about what I’ve done regarding asset transfers and what we’re going to do.