2013-08-31 16:28:06 - Recently published research from Business Monitor International, "Equatorial Guinea Oil & Gas Report Q4 2013", is now available at Fast Market Research
Rising interest in the deepwater potential of West Africa leaves Equatorial Guinea favourably placed, with proven hydrocarbon potential and a number of active operators. While we see opportunity for gains in oil output over the near term as new fields come online, the gains are set to be marginal and the increase in output temporary. We forecast that output will trend lower over the latter half of the decade, notwithstanding the upside for any new commercial discoveries. On the gas side, recent exploration success suggests Ophir has firmed-up the resource base to support an expansion of the country's liquefied natural gas export capacity, which could come in the form of a floating terminal or a new train at the existing
export facility. However, a decision is not imminent and given uncertainty regarding financing and potential export markets amid rising competition for market share, there remain a number of obstacles to overcome as the planned 2014 decision date approaches.
Full Report Details at
- www.fastmr.com/prod/670639_equatorial_guinea_oil_gas_report_q4_2 ..
The key trends and developments in Equatorial Guinea's oil and gas sector are:
* BMI expects oil production to reach approximately 325,000 barrels per day (b/d) in 2013, before peaking at 331,200b/d in 2016. Production growth will be driven almost entirely by new production from Noble Energy's Aseng and Alen developments. This will offset declining output from the flagship Zafiro field. Beyond 2016, we anticipate a steady decline in production unless further investment is made in exploration and production (E&P) with new discoveries being brought online.
* Equatorial Guinea recently announced the awarding of a number of onshore and offshore blocks to small and mid-sized players. Traditional international oil companies (IOCs) and players from Brazil, Africa, and Asia were among the winners. In announcing the awards, officials said other blocks would be put up for auction as additional 3D seismic data was made available.
* Equatorial Guinea's deepwater continues to attract operator interest. In May, Noble and junior PA Resources reported an oil discovery on Block I. Further investment, including drilling, is planned by other firms active offshore. Supported by high prices, we expect deepwater drilling to remain a key strength of the country's oil and gas sector on the back of rising interest in West Africa's offshore potential.
* Equatorial Guinea remains overly dependent on hydrocarbons production, which generates 78.0% of GDP, 89.0% of tax revenue and 97.0% of exports, according to BMI data. Concerns regarding the country's business environment, where high levels of corruption are often suggested, are evidenced by an announcement form the Norwegian Sovereign Wealth Fund that officials are considering divesting shares in oil and gas companies that operate in Equatorial Guinea given longstanding concerns that the country's oil wealth has not been used to alleviate chronic poverty.
* Ophir's latest offshore discoveries at Block R pose upside risk to our gas production forecasts. A decision to commercially develop the fields in support of an LNG expansion would cause us to revise our figures upward. In the most recent development, Ophir is reportedly considering a floating LNG platform. This concept may offer a more flexible and lower cost path toward monetisation, but could conflict with government plans for the larger and more permanent investment that would come with the addition of another train to the existing LNG export facility.
* Without a decision to develop Block R - which has yet to be included in our forecast as we await FID - or additional exploration success, we expect gas production to reach 7.1bcm in 2013 and fall to 5.9bcm by 2022. We see further upside on gas from any push to reduce flaring, although we note that such moves will require upfront investment in the infrastructure to capture and process gas.
* Oil and gas demand is set to rise steadily over our forecast period, with demand for the latter set to increase at a faster rate as the economy continues to expand and domestic infrastructure improves. BMI forecasts consumption of 1.8bcm in 2013, rising to 2.7bcm by 2022.
The development of a new 22,000b/d refinery at Mbini was set for a final investment decision (FID) at the end of 2012; yet, at the time of writing, no news regarding the project's fate was available. The government recently approached Sinopec to participate in the construction of the facility. Of all potential commercial partners, only Sinopec would be allowed an ownership stake in the facility, if selected. At the time of writing we assume an OPEC basket oil price for 2013 of US$103/bbl, falling to US$101/bbl in 2014.
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