Equatorial Guinea launches bid round

07 June 2016, Week 22, Issue 642

Equatorial Guinea launched its bidding round on June 6 at a press conference in Cape Town, during the Africa Oil & Power event. 

Equatorial Guinea Minister of Mines, Industry and Energy (MMIE) Gabriel Mbaga Obiang Lima officially launched the round, which called for expressions of interest on 37 open licences, of which 32 are offshore. The round, known as EG Ronda 2016, will run until November 30. 

There will be a roadshow in “London, then to Istanbul, then Singapore and then ending in November in Houston”, Obiang Lima said. “Then a week or two after [closing] we will announce the results. By the beginning of 2017, we will begin negotiations with the bidders.”

Negotiations are expected to close in June 2017, with the signature of production-sharing agreements (PSAs) and a move for ratification of licences. 

The minister, who is also the son of Equatorial Guinea President Teodoro Obiang Nguema Mbasogo, said it was important to keep “promoting activity, despite oil price falls. We must make sure companies do not become discouraged. Everyone must keep looking forward. This slump in oil prices is almost done.” 

In a prepared statement, Obiang Lima noted that the West African state had been a “proven profitable home for global oil and gas companies that explore our waters, and now we look forward to meeting potential explorers at roadshow events worldwide in 2016”.

The blocks on offer include the A-12 block, which has been recently relinquished by Marathon Oil and on which there have been “multiple oil discoveries”. Also up for grabs is the EG-05 block, which has been broken up into four offshore licences. This block had been operated by Glencore.  

There have been 114 wells drilled in Equatorial Guinea, with 48 discoveries, giving the country a success rate double the global average, according to the statement disseminated on the launch of EG Ronda 2016. The country has also taken steps to diversify downstream, with investments into storage, petrochemicals and floating LNG (FLNG). A brochure distributed on the bid round said contracts could be awarded via public tendering or direct negotiation. Exploration periods run for four or five years, with a maximum of two one-year extensions. The state is entitled to a carried interest of not less than 20%. 

 

Discoveries

The announcement of the new bid round followed a declaration of success at the EG-01-01 well, by Brazil’s Oleo e Gas. A statement from the MMIE on June 5 said the well had been drilled by the Sapphire Driller rig on the EG-01 block. 

The well was spudded in mid-March. It was intended to test the Campanian, at a depth of about 1,478 metres, and the Turonian, at 1,588 metres. 

Obiang Lima, commenting at the EG Ronda 2016 launch, said the well appeared to be a gas discovery, while noting the preliminary nature of the find. Talks with Oleo e Gas were encouraging the company to “to bring the gas onshore, for gas-to-power and maybe even petrochemicals”, he said. 

A statement from MMIE said the well was a “new stage” for the development of hydrocarbons in the country and that it would serve to support energy projects. Obiang Lima also noted progress by CNOOC Ltd in Equatorial Guinea and the apparent readiness of China’s Eximbank to support projects in the West African country.