One month after it announced the waiving of its fees for oil service companies in the country, Equatorial Guinea has granted E&P companies a two-year extension on their exploration programmes.
The grant, the country says, “will also ensure flexibility on the work programmes of producing companies to ensure growth and stability in the market”.
In late March, the Ministry of Mines and Hydrocarbons MMH said it took the unanimous decision to waive its fees for service companies for a duration of three months, adding that it recognised the fact that the oil sector continues to be the largest private sector employer in the country and “we want to give our local services companies the means to weather the storm and avoid any jobs being lost”. It said it was “the first action to be taken to support oil & gas services companies in the wake of the oil price drop caused by the coronavirus pandemic”.
Oil prices have headed farther south in the four weeks since that first announcement, with the horizon even cloudier. Yesterday’s press release announcing the grant of extension of tenor of acreage licences came less than a week after the Petroleum minister, Gabriel Mbaga Lima Obiang, suggested at a webinar that countries should be granting extensions for E&P licences at this time, as companies would be unable to carry out work programmes with any clarity until 2021.
“The Ministry of Mines and Hydrocarbons remains concerned about the resounding impact of the drop in oil prices, COVID-19 and its dramatic consequences on our hydrocarbons industry”, says the release.
“At a time of great uncertainty, we have an obligation to make bold, decisive, and pragmatic policy decisions to get the industry moving again,” the statement explains, adding that the government is fully committed to safeguard local oil & gas industry, its companies and its employees.
“The granting of these extensions has been deemed suitable to create an enabling environment for international and African companies to keep investing in Equatorial Guinea and ensure a quick recovery of our industry.
“The MMH will continue working with oil companies benefitting from such incentives to make sure that the recovery of Equatorial Guinea’s oil sector is made on the back of local content promotion, increased technology transfers, and procurement of additional local goods and services. A particular emphasis will be put on educating, training and promoting local workforce to help further reduce operational costs for international companies while maximising the creation of local value and revenue”.
With these proposals, the Equatoguinean authorities say they guarantee existing investments into Equatorial Guinea, while empowering local companies to assist their foreign partners in safeguarding and increasing their operations in the country.
“Some of these companies operating in Equatorial Guinea notably include ExxonMobil, EGLNG, Marathon Oil Corp, Atlas Petroleum, Kosmos Energy, Noble Energy, Glencore, Royal Gate Energy, Gunvor, Trident Energy, etc.
“Such historic measures are being rolled out as Equatorial Guinea implements a series of landmark projects across its upstream, midstream and downstream industries. The backfill project is already ongoing to pool supply from stranded gas in the Gulf of Guinea and replace declining output from the Alba Field. Meanwhile, the ongoing Year of Investment has generated strong interest from various existing and new players in Equatorial Guinea to build and expand midstream and downstream infrastructure and maximise local processing and transformation of domestic crude oil and natural gas.”