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New Market Report: Equatorial Guinea Oil & Gas Report Q1 2014


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2013-12-04 07:09:09 - New Energy market report from Business Monitor International: "Equatorial Guinea Oil & Gas Report Q1 2014"

Although the start of a number of small fields and continued interest in West Africa's deepwater are positive trends for Equatorial Guinea's oil and gas sector, the temporary recovery in oil production will gave way to gradual downtrend, placing the country's heavily oil dependent economy at risk. While the resources may have been identified to support an expansion of the country's LNG export capacity, uncertainty over the market and infrastructure has seen an investment decisions repeatedly delayed. Notwithstanding the risk of new discoveries, we expect both oil and gas production in the West African nation to gradually head lower over the course of the decade.

Full Report Details at
- www.fastmr.com/prod/723458_equatorial_guinea_oil_gas_report_q1_2 ..

The key trends and developments in Equatorial Guinea's oil and

gas sector are:

* Since having peaked in 2005 at 376,000b/d, oil production in Equatorial Guinea has failed to engineer a strong enough recovery to permanently return to growth. While output fell to 297,000b/d in 2011, volumes have since managed notable gains on the back of the start of smaller fields offshore. We estimate production will continue rising averaging 346,000b/d for 2013 and continue to make incremental gains before peaking at 376,000b/d in 2015.
* The start of new fields such as Carla and later Alen, will deliver gains over the course of our forecast period, but in our view are not enough to sustain the recent recovery in production. While we see some upside from prospects under appraisal, such as Noble's Diega and potential liquids from Ophir's gas rich Block R, we see do not believe development of these prospects alone will be able to offset falling volumes from currently producing fields. 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. 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.
* Gas production rose to 6.8bcm in 2011, according to the latest historical data from the EIA. BMI forecasts that production will to fall to 6.5bcm in 2013 and decrease steadily over our 10-year forecast period unless more investment is made in existing fields and new prospects. While a number of small liquids rich discoveries are due to come online associated gas from these developments is largely destined for reinjection at the well-site rather than for use to supply domestic or export markets.
* Production will see some marginal gains from projects such as new infrastructure the Alba gas-condensate feed which currently feeds the Bioko LNG terminal. However a larger upside stems from ongoing appraisal of Block R, where first gas could come as soon as 2018 according to operator Ophir Energy. Reducing gas flaring could also contribute to production growth, but for now, we expect output to gradually trend lower in line with falling output from associated gas fields such Alba and Zafiro notwithstanding the upside largely from Block R. We expect output to reach 5.7bcm by the end of our forecast period in 2022.
* Ophir Energy continues to appraise the prospective Block R. Following a 2012 drilling programme, Ophir increased its contingent resource estimate (2C) from 20bcm to 84bcm, and said the Tranquilla discovery may have de-risked the remaining 280bcm thought to be held in Block R. The company announced that an exploration and appraisal drilling programme will continue with 6 wells planned over 2013/14, and first gas could come as soon as 2018.
* According to a presentation from Ophir dated June 2013, the explorer is considering another several options for monetising the gas resources discovered at Block R. While option one calls for the construction of an additional train at EG LNG, a second option under consideration calls for use of a floating LNG (FLNG). A feasibility study is underway to evaluate the concept.
* Absent 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.

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$105/bbl, falling to US$101.8/bbl in 2014

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.


Author:
Bill Thompson
e-mail
Web: www.fastmr.com
Phone: 18008448156

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