Equatorial Guinea Envisions: Successful African Cross-Border Gas Cooperation

Equatorial Guinea is positioning itself as a gas hub in the Gulf of Guinea.  It aims to deliver where others have failed by developing the continent’s first successful cross-border gas venture. 

Gas is a key priority for Equatorial Guinea and its neighbours. While Cameroon launched the first Floating LNG project for Africa in 2018, Nigeria declared 2020 the Year of Gas and both countries continue to push for a gas-based economy to grow. On its side, Equatorial Guinea launched Africa’s first offshore gas mega-hub in 2019. When Definitive Agreements with Marathon Oil, Noble Energy, Atlas Petroleum, Glencore and Gunvor was signed to process stranded gas from its gas fields in Alen and Aseng. For Equatorial Guinea, the project is of strategic importance. Because the Alba field had been the sole supplier of gas to its Punta Europa complex which feeds many industries including an LNG train and a methanol production unit, both pursuing expansion. But such reception infrastructure could also be a godsend for Nigeria and Cameroon, both of which have many stranded gas fields across the maritime boundary of Equatorial Guinea and require off-take infrastructure.

The vision of Equatorial Guinea for gas is to become the gas mega-hub for the sub-region through the construction of several offshore hubs to monetize neighbouring gas reserves and develop downstream gas industries that spur industrial development and economic growth. For its current LNG export plant, EG LNG needs long-term gas supplies and is considering building a second LNG train. Meanwhile, by expanding its methanol production unit and diversifying output into methanol derivatives, the Atlantic Methanol Production Company has agreed to support the ongoing Year of Investment initiative. As demand for gas increases, the message from Equatorial Guinea to its neighbours is quite straightforward that we provide the processing and off-take infrastructure, you provide the feedstock.

Although similar projects had previously been developed in Africa, they have fallen short of expectations. For example, the West Africa Gas Pipeline is the continent’s first regional natural gas transmission system, yet it remains incapable of delivering reliable gas supplies to Benin, Togo and Ghana.

In the Gulf of Guinea the gas mega-hub Equatorial Guinea is developing will have its own challenges. Nigeria is not a member of OHADA and is working under a different legal structure than Equatorial Guinea and Cameroon. The three countries also have different petroleum laws, fiscal regimes and terms of the PSC. These are all factors that must be addressed if the vision is to become a reality.

At the multilateral meeting in Malabo H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea took a proactive step in creating an Executive Committee tasked with the acceleration of the progress of the gas mega-hub. The team is also tasked with ensuring the transportation of gas to and from the region. The conference, which brought together Marathon Oil, EG LNG and state-owned entities such as GEPetrol and Sonagas, is sending out a clear signal that a public-private partnership is under progress. What remains to be seen is whether Minister Obiang Lima can reach a deal to bring stranded, associated and even flared Nigerian gas to EG LNG on Bioko Island. The same is to be said of Cameroon’s Etinde coal. Nigeria and Cameroon have enough gas, but its viable marketing lies across the neighbouring maritime border with an EG LNG plant. Likewise, Nigerian Petroleum Resources Minister H.E. Chief Timipre Sylva makes to make a deal work is a key to the realization of Nigeria and Equatorial Guinea’s gas vision.

Data Source: African Energy Chamber