MALABO,
Equatorial Guinea, January 30, 2020/ -- Equatorial Guinea is
positioning itself as a hub
for gas in the Gulf of Guinea and hopes to
deliver where others have failed: developing the first successful
cross-border gas venture on the continent.
Gas is a key priority
for Equatorial Guinea and its neighbors. While Cameroon brought on
stream Africa’s first Floating LNG project in 2018, Nigeria has declared
2020 the Year of Gas and both countries continue to push for the
development of a gas-based economy. On its side, Equatorial Guinea
launched Africa’s first offshore gas mega hub last year when it signed
Definitive Agreements with Marathon Oil, Noble Energy, Atlas Petroleum,
Glencore and Gunvor to process stranded gas from its Alen and Aseng gas
fields, and offset production decline at the country’s Alba field.
The
project is of strategic importance for Equatorial Guinea because the
Alba field had been until now the sole supplier of gas to its Punta
Europa complex, which feeds several industries including an LNG train
and a methanol production unit, both seeking expansion. But such
receiving infrastructure could also be a godsend for Nigeria and
Cameroun who both have several stranded gas fields right across
Equatorial Guinea’s maritime boundary and in need of off-take
infrastructure.
Equatorial Guinea’s vision for gas is simple: it
wants to become that gas mega-hub for the sub-region by developing
several offshore hubs to monetize neighboring gas reserves and develop
downstream gas industries spurring industrial development and economic
growth. At home, its industries need gas. EG LNG needs long-term gas
supplies for its existing LNG export facility and is considering the
development of a second LNG train. Meanwhile, the Atlantic Methanol
Production Company has agreed to support the ongoing Year of Investment
initiative by expanding its methanol production unit and diversify
output into methanol derivatives. As demand for gas grows, Equatorial
Guinea’s message to its neighbors is very straightforward: we provide
the processing and off-take infrastructure, you provide the feedstock.
While
similar projects have been developed in Africa before, they have fallen
short of expectations. The West Africa Gas Pipeline for instance is the
first regional natural gas transmission system on the continent, yet
remains unable to deliver stable gas supplies to Benin, Togo and Ghana.
The
gas mega hub Equatorial Guinea is developing in the Gulf of Guinea will
have its own challenges. Nigeria does not belong to OHADA and operates
under a different legal regime than that of Equatorial Guinea and
Cameroon. The three countries also have different petroleum
legislations, fiscal regimes and PSC terms. These are all factors that
need to be addressed to turn vision into reality.
In a
multilateral meeting in Malabo on Wednesday, H.E. Gabriel Mbaga Obiang
Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, took a
proactive step in creating an Executive Committee tasked with the
acceleration of the progress of the gas mega hub. The team is also
tasked with ensuring that gas be transported in and outside of the
region. The meeting, which gathered Marathon Oil, EG LNG and state-owned
entities like GEPetrol and Sonagas, sends a clear signal that a
public-private partnership is in the making.
What is left to be
seen is if Minister Obiang Lima can put a deal together to bring
stranded, associated and even flared Nigerian gas to EG LNG on Bioko
Island. The same will be said of the Etinde gas from Cameroon. Nigeria
and Cameroon have enough gas, but its viable commercialization lies
across the neighboring maritime border with a facility like EG LNG.
Similarly, the ability of Nigerian Petroleum Resources Minister H.E
Chief Timipre Sylva to make a deal work is key to the realization of
Nigeria and Equatorial Guinea’s gas dreams.
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