Virtually all oil business on hold in Sub-Sahara Africa's 3rd largest producer
Virtually all oil and gas projects and licensing rounds are on hold in Equatorial Guinea as it braces for an extended oil downturn because of the coronavirus pandemic, the country's hydrocarbons minister said on Monday.
Equatorial Guinea, a tiny west African nation that relies on oil and gas for 90% of state revenue, had already been grappling with falling output and the desire of certain oil majors, such as ExxonMobil, to exit the country.
Hydrocarbons minister Gabriel Obiang Lima said the country would offer quick licence extensions and generous leeway on drilling requirements to keep companies afloat during the historic downturn that has sent oil prices to 20-year lows.
"The year 2020 and the year 2021 are 'lost years'," Obiang Lima said, referring to the oil industry.
The latest developments represent a stark reversal for a country that late last year said it would press companies to either drill or drop their licences.
The only project likely to continue this year, Obiang Lima said, was a gas backfilling project with Marathon because all the equipment was already in the country.
The flexibility being offered by the government could help Equatorial Guinea's oil and gas industry to remain attractive to international oil companies, Obiang Lima said
"The last thing you want is for any of these companies to go broke," he said, adding all necessary steps would be taken to save an industry he described as "the goose that lays the golden egg".
Obiang Lima said the government would also roll out new regulations this week that would require international oil companies (IOCs) to award more work to local firms.
"This is the time to call the IOCs and say ... every single contract you have, you have to give to local companies," he said, adding the pandemic was an opportunity for locals to fill the gap left by departed expatriate workers. "And if the local companies cannot do it, you are going to help them."
Next month, the government also plans to launch new legislation targeting the refining and petrochemicals sectors.
Equatorial Guinea is also "gradually" cutting production as agreed in an output reduction deal between OPEC and other oil producing states such as Russia, Obiang Lima said.