Country Analysis Brief on Equatorial Guinea.
U.S. Department of Energy
Equatorial Guinea is located in the western part of sub-Saharan Africa and is comprised of a mainland area (Rio Muni province) and a series of small islands, the largest of which, Bioko, houses the country´s capital, Malabo. Equatorial Guinea is notable as the only Spanish-speaking country in Africa, having gained independence from Spanish rule in 1968. The current president, Teodoro Obiang Nguema, came to power in 1979 through a self-initiated coup that overthrew Francisco Macias Nguema, Obiang´s uncle and the country´ s first president. In 1992, the government adopted legislation establishing a multiparty democracy. Since then, Obiang has been re-elected twice, most recently at the end of 2002, but both times amid his opponents´ allegations of election fraud.
Since independence, Equatorial Guinea´s government has been routinely charged with engaging excessively in corruption, human rights abuse and political repression, factors responsible for the closing of the US embassy in Malabo in 1995. With the rapid growth of US private investment in Equatorial Guinea since 1996, the increasing US interest in the region prompted a July 2002 decision to reopen the US embassy. The reintroduction of US diplomatic engagement in Equatorial Guinea is also aimed at fostering improvements in the country´s governance, particularly in light of continued allegations of corrupt government behavior.
For many years, agriculture (primarily cocoa, coffee and timber) formed the basis of the Equatoguinean economy. Since 1995, significant offshore oil discoveries in the Gulf of Guinea have caused oil to displace cocoa as the country´s most important export commodity, and has made oil production the major driver of Equatorial Guinea´s growth. Real gross domestic product (GDP) growth was 45.5% in 2001, up from the 16.9% growth in 2000, and narrowly missing the record 71.2% GDP growth experienced in 1997. Economic growth is expected to remain strong with estimates of real GDP growth of 24% in 2002 and 15% in 2003. U.S. investment (almost exclusively in the oilɛnergy sectors) has increased dramatically since 1996 and Equatorial Guinea is now the fourth largest destination for American investments in sub-Saharan Africa, after South Africa, Nigeria, and Angola.
Despite rapid growth in real GDP, there is strong evidence of government misappropriation of oil revenues, in particular, for lavish personal expenditures. Furthermore, the failure of the government to inject oil revenues into the country´s economy, especially to fund much-needed improvements in the country´s infrastructure, has meant little improvement in the economic and social welfare of most Equatoguineans. While real per capita GDP has doubled in the last five years, there has been little positive change in social indicators. Meanwhile, the rapidly expanding economy has begun to create inflationary pressure, translating into an average consumer price index (CPI) of 6% for the past few years. In 2002, the government responded to civil protests about rising food costs by fixing prices on several food staples.
Foreign aid historically has been an important part of the Equatorial Guinea´s economy, but during the early 1990´s, several donors suspended aid programs in Equatorial Guinea due to non-performance. The World Bank (WB) originally severed its relationship with Equatorial Guinea in 1993, but resumed lending to the country in April 2002 with a program aimed at the development of Equatorial Guinea´s transport sector. An IMF-negotiated enhanced structural adjustment facility (ESAF) with Equatorial Guinea expired in 1996. In Article IV consultations, which were concluded in August 2001, the IMF stated that renewed assistance from the fund would hinge on the government´s demonstration of improvements in macroeconomic management and governance, as well as the timeliness and transparency of statistical information required to monitor performance. The EU also has suspended its involvement in Equatorial Guinea, but stated that a gradual resumption of aid would occur in step with democratic reforms. Equatorial Guinea has retained normal relations with the African development Bank (AfDB), which has financed 24 loans and grants to the country.
OIL
Oil is Equatorial Guinea´s most valuable asset. Since the discovery of the Zafiro field in 1995, oil production has increased more than tenfold, and oil has quickly become the country´s most important export commodity, accounting for nearly 90% of the value of total exports in 2001. Furthermore, the location of Equatorial Guinea´s reserves in the hydrocarbon-rich Gulf of Guinea (estimates of probable reserves as high as 10% of world total), has prompted large amounts of foreign investment (primarily by US companies) in further exploration and development of the country´s oil sector.
The government´s involvement in the oil industry has expanded slowly since 1998, when the government introduced more liberal regulatory and profit-sharing arrangements for hydrocarbon exploration and production activities, including revised and updated Production Sharing Contracts (PSC). As a result, government oil revenues increased from 13% to 20% of receipts earned from oil exports. Although significant, the government´s share is still relatively small by international standards. In 2001, GE Petrol was formed as the new state-run oil company. Although GE Petrol was originally proposed to focus on downstream activities, its activities have included managing the government´s interest (currently, about 5%) in PSCs. Plans to increase the government´s stake in new and existing contracts have been announced, but not formally pursued. In 2002, the government announced an expansion of GE Petrol´s powers to include the creation of agencies and subsidiaries abroad as well as investment in other national or foreign companies. GE Petrol has since formed a joint-venture with Swiss-based Glencore for exploration of Block O, between Bioko and Cameroon.
ReservesƐxploration
Equatorial Guinea´s total proven reserves are estimated at 1.1 billion barrels of oil. Presently, the majority of the country´s oil reserves are found in the Zafiro field, which is located offshore, northwest of Bioko and south of Nigeria´s Edop, Etin and Ofun fields. The Zafiro field was discovered in 1995 by ExxonMobil and Ocean Energy (merged with Devon Energy in 2003) and constitutes the northern portion of Block B, for which the two companies hold an exploration license. The Zafiro field´s probable reserves are estimated to be as much as 1 billion barrels.
ExxonMobil has focused on increasing production from the Zafiro field in recent years and therefore, additional drilling has been carried out to accomodate this plan. Other discoveries that have been made on Block B include the Opalo East, Topacio, Amatista, Rubi and Serpentina fields. ExxonMobil and Devon have also pursued joint exploration of Block C, which lies between Block B and Bioko´s western coast. During 2003, Exxon has planned to drill 5 additional wells in Block B.
Equatorial Guinea´s second major producing oil field is located just offshore of Rio Muni in exploration Block G, and is estimated to contain 300 million barrels of oil. The Ceiba field, which was discovered by Amerada Hess (formerly Triton Energy) in 1999, began production just 14 months after its discovery, a record that was facilitated by the government´s strong interest in accomodating oil sector development. Amerada Hess has an 85% interest in Blocks G and F (directly north of G), for which it shares licenses with South Africa´s Energy Africa (15% interest). These two companies have experienced continued successful exploration of Block G, resulting in additional discoveries in 2001 (Okume and Oveng fields) and 2002 (Akom, Elon and Abang fields). Initial exploration of Block F was unsuccessful until the early 2002 discovery of the Ebano Field in the southern part of Block F, although subsequent drilling in other wells in Block F has also come up dry. Following the discovery of the Abang field in June 2002, Amerada Hess and Energy Africa planned to submit a plan to the Equatoguinean government for the development of their six recent discoveries in Blocks F and G. The companies hope to achieve production of up to 100,000 barrels per day (bbl/d) from the new fields by early 2004.
Following the discovery of the Ceiba field, the first major discovery of oil offshore of Rio Muni, interest in petroleum exploration of surrounding areas has been significant, with many new companies acquiring licenses in exploration blocks further offshore in the Rio Muni basin. International companies with interests in one or more exploration blocks include Chevron (US), Vanco Energy (US), Atlas Petroleum International (US), Devon Energy (US), Roc Oil (Australia), Petronas (Malaysia), Sasol Petroleum (South Africa), and Glencore (Switzerland). As many as five wells are planned to be drilled in the Rio Muni Basin area in 2003.
To the east of the Zafiro field, and just north of Bioko, is the Alba field, discovered in 1991. Original estimates of reserves in the Alba field were around 68 million barrels of oil equivalent (BOE), but recent exploration has increased new estimates significantly. Unlike the Zafiro or Ceiba fields, exploration and production in the Alba field has focused on natural gas, including condensates, which is described in further detail below.
The expansion of offshore oil exploration by Equatorial Guinea and its neighbors has increased the importance of maritime borders used to delineate each country´s rights to offshore oil deposits. In March 1999, President Obiang signed a decree unilaterally adopting an equidistant median line to define territorial boundaries as stipulated under the UN Convention on the Law of the Sea. Cameroon, Sao Tome & Principe, and Nigeria subsequently accepted the decision as an improvement over oft-disputed traditional boundaries. Relations remained strained, however, because of Nigeria´s ongoing border dispute with Cameroon, which continues following Nigeria´s refusal to accept the October 2002 decision of the International Court of Justice (ICJ) to award sovereignty over the disputed area to Cameroon.
Equatorial Guinea currently is involved in a similar dispute with Gabon, over the ownership of the island of Mbagne in the Gulf of Guinea. In February 2002, Equatorial Guinea´s nominal control of Mbagne was threatened when the government of Gabon seized control of the island. Since then, the governments of both countries have met to discuss the issue, including the possibility of joint-exploration of the waters surrounding Mbagne, but have not achieved any resolution to their dispute.
On a positive note, tensions have been dispelled between the Nigerian and Equatoguinean governments over the latter´s claim of sole ownership of the Zafiro field. At issue was whether the Zafiro was a separate field, or part of an oil structure that straddled the territorial waters of both countries. Tensions began when TotalFinaElf (Total, formerly Elf) (licensee of the Nigerian Block OPL 102, 2 miles north of Zafiro) and the Nigerian government reported that seismic data of the Zafiro field confirmed that it extended into Nigerian territory. In 1998, Total drilled two wells on OPL 102 and announced a discovery called Ekanga, which was subsequently challenged by Equatorial Guinea´s claims that the Ekanga wells were drilled in its territorial waters. In September 2000, Equatorial Guinea and Nigeria signed a pact delineating their maritime boundaries. This was followed by an April 2002 treaty in which the countries agreed to joint exploration of crude oil in the Zafiro-Ekanga field.
Production
Oil production from Equatorial Guinea is expanding rapidly, averaging 210,000 bbl/d in 2002, a tremendous increase from the 1996 level of 17,000 bbl/d. During 2003, production improvements and expansions have pushed petroleum output even higher to near 350,000 bbl/d. Meanwhile, the government has denied rumors that it would cap production levels to extend the life of the country´s petroleum reserves.
The Zafiro field is Equatorial Guinea´s largest oil producer. Production at Zafiro has risen from its initial level of 7,000 bbl/d in August 1996 to approximately 180,000 bbl/d at the end of 2002. Since 1998, ExxonMobil has invested over $1 billion in expanding production from the Zafiro field. Important developments have included the completion of the Jade Platform in June 2000, which added 12,000 bbl/d to production. More significantly, in July 2003, the producer began operation of a new Floating Production Storage and Offloading (FPSO) vessel in the Southern Expansion Area (SEA) of the Zafiro field. This expansion project was implemented under Exxon Mobil´s Early Production System, which succeeded in bringing the project online in 19 months, increasing production at the Zafiro field to 300,000 bbl/d.
Production at the Ceiba field rose dramatically during 2002, following production improvements. The Ceiba field originally began production in December 2000 with a target of 50,000 bbl/d; however, in Februrary 2001, Triton Energy reported that technical difficulties at the Ceiba-1 well were limiting production to 45,000 bbl/d. Following Amerada Hess´ acquisition of Triton in 2001, the company announced a plan to replace the existing Sendje Berge FPSO in the Ceiba field with a larger FPSO. In Februrary 2002, Amerada Hess completed installation of the Sendje Ceiba and production in the Ceiba field increased to above 50,000 bbl/d. By the end of 2002, production at the Ceiba field was scheduled to increase to 90,000 bbl/d.
Downstream
Equatorial Guinea´s domestic petroleum consumption is estimated at 2,000 bbl/d, primarily in the form of motor fuel. The company Getotal, jointly owned by TFE and the government of Equatorial Guinea, has a monopoly on the distribution of petroleum products, all of which are imported.
NATURAL GAS
Equatorial Guinea´ natural gas reserves are located offshore of Bioko, primarily in the Alba and Zafiro oil and gas fields. At present, Alba, the country´s largest natural gas field, contains 1.3 trillion cubic feet (Tcf) of proven reserves, but probable reserves are estimated to be at least 4 Tcf. The Alba field was discovered in 1991 by the Spanish firm, Cespa, at which time it was also estimated to contain 68 million barrels of condensate. Throughout the 1990´s, Alba was used primarily for condensate production, averaging 6,700 bbl/d of condensate and liquified petroleum gas (LPG) production in 1999, while much of the natural gas from the field was flared off. With a 63.3% interest, Marathon Oil (acquired CMS Energy´s assets in late 2001) is the largest stakeholder in the Alba field, with Noble Energy holding a 36.7% interest. Recently, Marathon has expanded exploration of natural gas in the Alba field in conjunction with its other expansion plans for production and processing of natural gas. In July 2003, Marathon reported a new discovery in Block D, named the Bococo field, located 6 miles west of the Alba field.
Natural gas and condensate production in Equatorial Guinea has expanded rapidly in the last five years in response to new investments by major stakeholders in the Alba nautral gas field. In 2001, the Atlantic Methanol Production Company (AMPCO) completed construction of a $450 million methanol plant on Bioko, which now produces 20,000 bbl/d of methanol using 120 million cubic feet (MMcf/d) of natural gas from the Alba field. Nobel Affiliates and CMS Energy formed AMPCO in 1999 as a joint venture, equally sharing a 90% interest in the plant with the remaining 10% held by the Equatoguinean government. The U.S. Overseas Private Investment Corporation (OPIC) provided funding for the project in the form of a $173 milllion loan guarantee, OPIC´s largest-ever African loan.
At the end of 2001, production in the Alba gas field was up to 17,000 bbl/d of natural gas condensate, 2,700 bbl/d of LPG and 240 MMcf/d of natural gas. Earlier this year, Marathon was planning the sale of $400 million of its non-core assets to enable it to focus on further development of its natural gas assets in Equatorial Guinea. In late 2002, Marathon Oil received approval from the government to expand condensate production to 46,000 bbl/d and LPG production, to 16,000 bbl/d by October 2004. The first part of this expansion is expected to utilize 800 MMcf/d of wet natural gas for condensate production, and is scheduled for completion by the end of 2003.
More recently, in May 2003, the government approved Marathon´s proposal to construct a liquified natural gas (LNG) facility on Bioko that will supply 3.4 million tons of LNG. Marathon has signed a Memorandum of Understanding (MOU) with British Gas to export the LNG to its U.S facilities for a 17-year period beginning in 2007, the facility´s expected completion date. While a financing scheme for the plant has not yet been reported, the government of Equatorial Guinea has stated that it is considering a 25% interest in the project. The LNG facility is expected to increase the importance of Equatorial Guinea in the region´s natural gas market with the possibility of it serving as a point of completion for future natural gas production from neighboring countries.
Natural gas consumption in Equatorial Guinea has slowly increased in recent years, as increased production has made natural gas conveniently accessible. Natural gas consumption in 2001 was approximately 1 Bcf.
ELECTRICITY
Estimates of Equatorial Guinea´s generating capacity vary, with 15.4 megawatts (MW) of certain installed capacity, and 5-30 MW of estimated additional capacity. About 5.0 MW are located on the mainland, including 4 MW of oil-fired thermal capacity and 1 MW of hydroelectric capacity. Bioko is known to receive electricity from at least two thermal plants and one hydroelectric plant. The expansion of natural gas production at the Alba field in recent years has provided a convenient fuel source for new generation. The 10.4-MW, natural gas-fired Punta Europa plant began operation in 1999 and supplies electricity to Bioko while another natural gas-fired, 4-6 MW of generation is currently under construction at the AMPCO complex on the island. Equatorial Guinea is estimated to have 2,600 MW of hydropower potential.
Equatorial Guinea´s electricity sector is owned and operated by the state-run monopoly, SEGESA. In general, the power supply is somewhat unreliable, due to aging equipment and poor management, as demonstrated by prolonged blackouts in Malabo in May 2002 and again, in April 2003. As a result, small, diesel generators are widely-used as a back-up source of power supply.
Sources for this report include: Africa Energy and Mining; CIA World Factbook; Dow Jones Newswire; Economist Intelligence Unit ViewsWire; Energy Day; Financial Times African Energy; Global Insight; International Monetary Fund; Oil and Gas Journal; PR Newswire; RigZone; U.S. Energy Information Administration; World Bank; World Markets Analysis
COUNTRY OVERVIEW
President: Teodoro Obiang Nguema
Prime Minister: Candido Muatetema Rivas
Independence: October 12, 1968 (from Spain)
Population (July 2003E): 510,500
Location/Size: West Central Africa -- the mainland region of Rio Muni borders the Atlantic Ocean just north of the Equator between Cameroon and Gabon; the islands of Bioko, Annobon, Elobey Grande, Elobey Chico and Corisco lie in the Atlantic Ocean / 28,050 square kilometers (10,831 square miles), about the size of Maryland
Major Cities: Malabo (capital) on island of Bioko, Bata on mainland enclave of Rio Muni
Languages: Spanish and French (official languages), Fang, Pidgin English, Bubi
Ethnic Groups: Fang (constitute majority of mainland population), Bubi (on Bioko), Annobonese, Ndowe, Kombe, and Bujebas
Religion: Christian (predominantly Roman Catholic), Traditional Beliefs
ECONOMIC OVERVIEW
Minister of Economic Affairs & Finance: Baltasar Engonga Edjo
Minister of State in Charge of Economy & Commerce: Marcelino Nguema Onguene
Currency: Communauté Financière Africaine (CFA) franc; CFA franc fixed to the Euro since Jan. 1, 1999
Market Exchange Rate (09/12/03): US$1 = 580.4 CFA Fr
Gross Domestic Product (GDP) (2002E): $2.4 billion; (2001E): $3.6 billion
Real GDP Growth Rate (2002E): 24%; (2003E): 15%
Consumer Price Inflation Rate (2002E): 7.2%; (2003E): 6.8%
Current Account Balance (2000): -$300 million; (2001): -$400 million
Major Trading Partners: United States, Spain, France, China, Cameroon, United Kingdom, Japan
Merchandise Exports (2002E): $2.2 billion; (2003E): $3.0 billion
Merchandise Imports (2002E): $400 million; (2003E): $400 million
Merchandise Trade Surplus (2002E): $1.8 billion; (2003E): $2.5 billion
Major Export Products: Oil, timber, cocoa
Major Import Products: Food, clothing, petroleum products, automobiles, machinery, iron and steel
Total External Debt (2001): $260 million
ENERGY OVERVIEW
Minister of Mines and Energy: Cristobal Menana Ela
Secretary of State for Energy: Miguel Ekua Ondo
Proven Oil Reserves (1/1/03E): 1.1 billion barrels
Oil Production (2001): 181,000 barrels per day (bbl/d), all of which is crude oil
Oil Consumption (2001): 2,000 bbl/d
Net Oil Exports (2001E): 179,000 bbl/d
Natural Gas Reserves (1/1/03E): 1.3 trillion cubic feet (Tcf)
Electric Generation Capacity (1/1/03): 15.4 megawatts (of which 80% is thermal an 20% hydroelectric)
Electricity Generation (2001): 24 million kilowatthours
ENVIRONMENTAL OVERVIEW
Minister of Forestry and Environment: Teodoro Nguema Obiang
Total Energy Consumption (2001): 0.005 quadrillion Btu (<0.001% of world total energy consumption)
Energy-Related Carbon Emissions (2001): 0.57 million metric tons of carbon (<0.01% of world carbon emissions)
Per Capita Energy Consumption (2001): 10.5 million Btu (vs. U.S. value of 341.8 million Btu)
Per Capita Carbon Emissions (2001): 1.2 metric tons of carbon (vs. U.S. value of 5.5 metric tons of carbon)
Fuel Share of Energy Consumption (2001): Oil (84.7%), Natural Gas (15%), Hydropower (0.3%)
Fuel Share of Carbon Emissions (2001): Oil (10.9%), Natural Gas (89.1%), Coal (0.0%)
Status in Climate Change Negotiations: Equatorial Guinea signed and ratified both the United Nations Framework Convention on Climate Change and the Kyoto Protocol on August 16, 2000.
Major Environmental Issues: Deforestation, wildlife destruction, non-potable tap water and desertification.
Major International Environmental Agreements: A party to the Conventions on Biodiversity, Desertification, Endangered Species, Law of the Sea and Ship Pollution.
OIL AND GAS INDUSTRIES
Organization: Petroguinea state company in upstream activities (not yet active); downstream activities - Getotal (owned by TotalFinaElf-80% and Equatorial Guinea-20%)
Major Oil Fields (2002 production): Zafiro (180,000 bbl/d), Ceiba (50,000 bbl/d), Alba (6,500 bbl/d)
Major Foreign Oil Company Involvement: ExxonMobil, Amerada Hess (formerly Triton), ChevronTexaco, Energy Africa, Marathon Oil, Noble Affiliates, Devon Energy, Petronas
Refineries: None
Pipelines: None
Terminals: Proposed LNG terminal on Bioko (expected completion date of 2007)
Fuente: Departamento de Energía U.S.A.
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