Equatorial Guinea’s oil and gas sector is on a path to recovery and is laying the groundwork for new initiatives towards economic advancement and legislative stability
The country’s economic structure is to be applauded as it prioritises the development of local production and local participation in its petroleum sector. For example, Equatorial Guinea produces 244,000.00 barrels per day of oil (bopd) (as of 2016), ranking 34th in the world, and has managed to increase its production capacity of gas significantly by 5.73%, yearly, from 6.2 mn cu/m in 2015, to 7.75 mn cu/m in 2018. As it stands, Equatorial Guinea is expected to continue to increase its production levels as new developments and projects are executed.
The county’s upstream sector plays a critical role in driving the growth of the petroleum sector, and ultimately, the economy. It is therefore important that adequate policies and regulations are put in place to ensure consistency in the county’s economic development.
It is important to highlight some of the key companies involved in the production and distribution of oil and gas. While ExxonMobil's upstream affiliate in Equatorial Guinea, Mobil Equatorial Guinea Inc. (MEGI), is the largest oil producer in the country, Sociedad Nacional de Gas de Guinea Ecuatorial (Sonagas)—Equatorial Guinea’s state-owned hydrocarbon company—manages the distribution, marketing, and exploration of the nation's natural gas assets, including the industrial and residential natural gas markets.
As the only Spanish speaking country in the African continent, Equatorial Guinea has registered the highest growth path in Africa over the last five years. The country has become the most dependent on oil in the world, due to significant oil discoveries that are structurally altering the economy. To that end, Equatorial Guinea is among several emerging oil-producing nations that have shown reluctance to embrace the global aspirations regarding energy transition.
With regards to the nation’s legislative framework for the exploration and production (“development”) of hydrocarbons, Equatorial Guinea is governed by the Hydrocarbons Law which came into force in November 2006 and was complemented in 2013 and 2014 by Regulations on Petroleum Operations and Regulations on National Content, respectively. Under the Hydrocarbons law, petroleum contracts are negotiated using a model contract developed by the Ministry in charge of petroleum operations. These contracts usually take the form of production sharing contracts (PSCs).
