JOHANNESBURG, South Africa, January 2023/ — Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea and the President of both the GECF and OPEC for 2023, gave exclusive insight into Equatorial Guinea’s energy sector during a roundtable session organized by the African Energy Chamber (AEC) (http://www.EnergyChamber.org).
Moderated by NJ Ayuk, Executive Chairman of the AEC, the Minister highlighted the agenda of the Organization of Petroleum Exporting Countries (OPEC) and intra-Africa collaboration while providing updates on several Equatorial Guinean energy projects.
The African Energy Chamber is hosting the Invest in African Energy New Year Reception in London at the end of this month. What role do you feel European stakeholders will play in Africa’s energy expansion this year and what key messages do you hope to see driven at the event?
It is a very wise move for one key reason. London, for many years, has been the single funding supplier for oil and gas in Africa. When we wanted to get money to drill, we went to London. Now I believe there will be a new opportunity for the funding sector in the UK to take the opportunity to invest in Africa. This does not only include oil but gas, and the UK is one of the main consumers of gas. To secure that resource, you need to provide the money for it.
What’s your position on using Equatorial Guinea sovereign funds and investing those funds into an African energy bank?
People need to realize that the creation of a sovereign fund is a privilege for some countries. Our access to sovereign funds is unequal compared to big producers. This solution cannot be an opportunity for every producer. Pension funds in Nigeria compared to Equatorial Guinea are different. Small markets and small producers find it more difficult.
When it comes to OPEC, we saw several countries failing to meet their targets, including Equatorial Guinea. What has been behind that and do you foresee a recovery in the next few months?
Simply put, it’s money. Any oil and gas producing country struggles with funding. Even exploration companies, because to drill wells, they need to raise their own money. Right now, we have close to 64 wells that need to be redrilled, and for this, we cannot find funds. A lot of infrastructure has been designed for a specific period and without funds, we are left with a lot of problems. For us to continue exploring, we need to reinvest. This is where we are finding difficulty. It has nothing to do with oil running out, it is that funding is more limited.
You have pending exploration contracts with companies. Can we expect these to be signed soon?
Yes, we are in the final stages and will be signing shortly. We will be signing and going straight to work.
From an OPEC perspective, do you feel that the current oil price represents a stable market?
Being a volatile year, small incidents are impacting everything. Everyone wants to avoid a recession, and to do that, you need to invest. There will be a lot of demand. China is also opening again after COVID. At this time, we believe that it is important to monitor.
What is the feeling in the group regarding the state of the market? Is there a production target for the year in terms of Zafiro and is there a chance of getting back to the 100,000 bpd?
The sentiment is that there are two issues that we all need to monitor closely. The first is China and the conflict between Russia and Ukraine.
Regarding Zafiro, at this moment, we are reconnecting the wells that were disconnected. We are planning to resume production at the end of February. Other key things include more drilling and more work. Operators need to evaluate the plan of development. Once we have all the data, that’s when we can apply a quota.
Last year you announced the launch of the Central African Pipeline System. What is the status of this multi-faceted project and why do you feel it is so important for the continent in the current day and age? Do you foresee funding being smooth?
It is going according to the plan. 2022 was the year that we needed to inform everyone about the project, and APPO confirmed they will be working on it. We are already working on the first phase.
I think the only thing the bankers and financiers are waiting for is the study. Everyone understands the project, they want to see the physical study in terms of supply, demand, and where the pipeline will go. The project will be conducted in phases. In future phases, you can interconnect.
Do you have any contractors, finance or operators lined up for Fortuna?
With Fortuna, we already have the discovery and the oil. We cannot just develop one resource without having a long-term view. We have put people in place, but have decided to go back to the drawing room. We need to make sure we continue with exploration. Thereafter, we will once again revise the development. The government wants to make sure we can maximize development.
Equatorial Guinea has also taken over the Presidency of the GECF this year. What are your key objectives in this position?
Regarding the GECF agenda, the organization will play a very important role in Africa for a couple of reasons. Firstly, the President of GECF is an African country, secondly, the Secretary-General is an African, thirdly, in Nigeria in November this year there will be a head-of-state summit of gas-producing countries, and lastly, it is a resource that is much-needed across the continent.
This year, what will be key is the exportation of gas from Africa such as Mozambique, Senegal and Equatorial Guinea. This is why we have encouraged the GECF team to do the same thing that was done with OPEC at African Energy Week in Cape Town last year, to give a platform to the Secretary General to drive the narrative of gas.