Equatorial Guinea extends upstream deadlines to ease pressure on producers

Equatorial Guinea has extended its contractual deadlines for exploration and development work programs in a bid to ease the financial pressure on oil and gas companies amid the COVID-19 pandemic.

Companies operating in the central Africa producer have been granted a two-year extension on their exploration programs, the country's ministry of mines and hydrocarbons said Monday, adding it will also "ensure flexibility on the work programmes of producing companies to ensure growth and stability in the market."

The pandemic has been a setback for the OPEC's smallest producer, which has been desperate to reinvigorate upstream activity and stem a decline in oil output from its maturing fields.

The ministry is keen to incentivize its foreign partners to maintain their investments in the country, especially as these companies start to cut back their upstream projects due to recent price collapse.

"The granting of these extensions has been deemed suitable to create an enabling environment for international and African companies to keep investing in Equatorial Guinea and ensure a quick recovery of our industry," said Equatorial Guinea's minister of mines and hydrocarbons Gabriel Obiang Lima.

UPSTREAM PROJECT DELAYS

Last week, Obiang admitted that the OPEC member will have to put the bulk of its upcoming upstream projects on hold due to recent events.

One of the country's projects that has been affected and postponed due to the current crisis is upstream work in Block S in Equatorial Guinea's offshore Rio Muni basin.

Dallas-based Kosmos Energy discovered 9 meters of net oil play at the S-5 well in May last year. The well is located within tieback range of the Ceiba floating production, storage and offloading vessel, which produces around 30,000 b/d of crude.

ExxonMobil, Marathon Oil, Kosmos Energy, Glencore, Gunvor are some of the oil companies heavily involved in the Central African country.

In the country's most recent licensing round, Last year, Russia's Lukoil, Africa-focused explorer Vaalco Energy, Noble Energy, Africa Oil Corporation, and WalterSmith-Hawtai picked up some blocks.

Equatorial Guinea began producing oil in 1995, and its production peaked at 425,000 b/d in 2004. The country has been struggling to halt decline rates averaging 10% a year from its existing fields. Production has been averaging around 120,000-130,000 b/d so far this year, according to S&P Global Platts estimates.

Under the latest OPEC+ deal, Equatorial Guinea committed to keeping its crude output at 98,000 b/d in May and June, a decrease of 29,000 b/d from its baseline of 127,000 b/d. From July through December it will pump 104,000 b/d, while from January 2021 through April 2022, it will cap production at 110,000 b/d, under the agreement.