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Equatorial Guinea sees oil output lift in 2020 from new finds

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Equatorial Guinea sees oil output lift in 2020 from new finds

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London — Equatorial Guinea expects to reverse its declining crude production next year after two recent offshore oil finds are brought on stream with tie-backs to existing infrastructure, the country's oil minister said Wednesday.

OPEC's smallest producer is currently producing about 120,000 b/d of crude but this will rise in 2020 when recent discoveries by Noble Energy and Kosmos Energy start to flow, Gabriel Obiang Lima said.

Noble Energy made an oil discovery in Block 1 offshore Equatorial Guinea in late August. The US-based company said it expected to connect the find to its existing infrastructure by October. Over the weekend, the oil ministry said Dallas-based Kosmos Energy found oil near the Trident Energy-operated Ceiba field in the offshore Rio Muni basin.

"The good news is that with the [drilling] campaign that we had this year, next year probably our crude production is going to increase," Obiang told reporters on the sidelines of an industry event in Cape Town.

In September, before the latest Kosmos find, Obiang said the country's oil output could average around 145,000 b/d starting next year.

Speaking on Wednesday, he said he was also hopeful of further finds from offshore exploration wells planned by Trident next year.

Equatorial Guinea began producing oil in 1995 and its production peaked at 425,000 b/d in 2004. The country is struggling to halt decline rates averaging 10% a year from its existing fields with a number of new projects.

Zafiro data room

Obiang said Equatorial Guinea has also received interest from "several" oil companies to take over ExxonMobil's mature Zafiro oil and gas field, the license for which is due to expire in 2025.

Talks are currently ongoing with ExxonMobil over opening a data room on the Zafiro asset for selected companies to study the potential for late-life recovery upside at the declining field.

"For an asset like Zafiro, you need to be a company that can continue the work done by ExxonMobil and we feel can be comfortable doing the job...We need to make a decision as soon as possible regarding that asset."

Output at Zafiro, which started production in 1996, has fallen to around 60,000 b/d from around 100,000 b/d in 2015, and further decline is likely.

Licensing round

Obiang said the country has received 21 bids on 13 blocks from oil companies in the current licensing round with seven to eight blocks shortlisted to "move forward" toward an award planned for late November.

The licensing round includes 24 offshore and two onshore blocks and covers Ophir Energy's former gas-rich Block R, which was to feed its shelved Fortuna floating LNG project.

Sources have previously said that Russian oil giant Rosneft and Italy's Eni had expressed an interest in developing the Fortuna LNG project, which is part of a new licensing round.

The round closed on September 27, and winners will be announced at the Gas Exporting Countries Forum 5th Gas Summit in Equatorial Guinea on November 27-79. The government expects to sign the final production sharing contract in early 2020.

--Robert Perkins, robert.perkins@spglobal.com
--Edited by Jonathan Dart, newsdesk@spglobal.com