Page 5 - AfrOil Week 41 2021

AfrOil COMMENTARY AfrOil

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

(Image: Noble Energy)

Week 41 13•October•2021 www. NEWSBASE .com P5