Page 7 - DMEA Week 41 2021

DMEA COMMENTARY DMEA

Falling production in 2022,” he said. “The changes will be focused
It is not clear, though, that this objective will be on helping to backfill supply to Punta Europa.”
met. David Thomson, vice president of sub-Sa- His statements may be a reference to Lima’s
haran Africa research at Houston-based Welli- announcement during the webinar last month
gence Energy Analytics, told NewsBase earlier that Equatorial Guinea’s government was gear-
this week that he did not expect Equatorial Guin- ing up to formulate a new Hydrocarbon Law for
ea’s gas production to rise in the near future. the country. During his presentation, the minis-
The country is currently extracting around ter said that Malabo wanted to reward compa-
650-700 million cubic feet (18.4-19.8 million nies that helped to develop gas fields and other
cubic metres) per day, he noted, and its yields upstream assets.
are likely to drop over the next few years, just as “This is no time to stop and be comfortable.
they have been doing since 2018. Gas output is In the era of energy transition and stiff compe-
“expected to decline going forward,” he said. tition for capital, it is important to be pragmatic
Moreover, Thomson said, Equatorial Guinea and have a hydrocarbon law that deals with
does not appear to be heading for a wave of new today’s realities and incentivize growth,” Lima
discoveries. The country is not slated to bring commented. “We have to be more competitive,
more undeveloped sites on line any time soon cut red tape, promote free markets, balance local
and shows “little sign of appetite for full green- content, create more jobs and increase our tax
field developments,” he commented. base.”
Additionally, he also raised questions about
the efficacy and long-term impact of the Alen Second-phase hurdles
scheme. “A further phase of the Alen gas project But even if these challenges can be overcome,
is believed to be progressing, but its scope and the second phase of Equatorial Guinea’s MGH
timeframe is unclear,” he told NewsBase. project will also face steep challenges.
He did not elaborate, but it is worth noting According to Thomson, the hurdles may be
that his statements are in line with suggestions legal, logistical or diplomatic. “Potentially, we
from IHS Markit that paint Alen as more of a will see stranded Nigerian and Cameroonian gas
stopgap than a solution. According to the con- fields developed as part of the hub. Yolanda in
sultancy, the gas project may “help maintain Cameroon is a prime candidate,” he told News-
feedstock to the EG LNG facility until the mid- Base. “But cross-border agreements are tricky,
2020s, but longer-term supply stability is still and Nigeria is also facing supply pressures for
uncertain.” its NLNG [Nigeria LNG] project and its own
domestic market.”
New gas streams It’s not yet clear whether Equatorial Guinea
Presumably, Malabo could help reduce the level is ready to work to achieve this goal. If it does,
of uncertainty by taking steps to encourage though – and if it succeeds – it may just be able
investment in upstream gas exploration and to sell its neighbours on its vision of a regional
development. gas trading hub that uses tie-backs and pipelines
For his part, Thomson believes that Malabo to connect local and nearby fields to facilities in
does recognise the importance of securing new Punta Europa rather than relying on floating
sources of gas production, even if it is working production, storage and off-loading (FPSOs).
slowly. He told NewsBase that Equatoguinean “Utilising existing infrastructure has cost and
authorities were “working on gas incentives as time advantages over deploying new kit,” he
part of its mega-hub plan, and these are expected commented.™

Week 41 14•October•2021 www. NEWSBASE .com P7