The Star of the Gulf of Guinea

Article excerpt

The explosion in oil exploration and production in the Gulf of Guinea has been one of the main developments in the global oil and gas sector over the past few years. New discoveries have triggered a re-evaluation of the region's prospects and investment has poured in.

As a result of its location at the heart of the Gulf of Guinea, Equatorial Guinea has benefited more than most. Ever since the Ceiba deepwater field was discovered in 1999, interest in Equatorial Guinean acreage has soared and large-scale investment has been rewarded by a string of new finds.

Gabon and Congo-Brazzaville had long been Sub-Saharan Africa's third and fourth biggest oil producers, after Nigeria and Angola, but Equatorial Guinea is already in the process of overtaking both of its neighbours. As established fields in mature producers such as Congo-Brazzaville and Gabon have begun to become exhausted, Equatorial Guinea has led a wave of new producers in the region that have catapulted the Gulf of Guinea to global prominence.

Equatorial Guinea's first major hydrocarbon find was the Alba field on Block D, which was developed by CMS Energy, although the company sold its oil assets to Marathon Oil at the end of 2001.

Despite its oil riches, the field is primarily a condensate field. Around 17,000 barrels a day (b/d) of condensate and 4,500 b/d of liquefied petroleum gas (LPG) are extracted from 250m cubic feet of wet gas a day, before the remainder is piped to the Ampco methanol plant for processing.

A plan to gradually increase production capacity has been drawn up and two new platforms are being used to make the most of the 12 new wells that have been drilled. As a result, LPG output on the field is expected to reach 7,500 b/d by the end of 2005, while Alba will also be used to supply the new liquefied natural gas (LNG) plant planned for Punta Europa on the main Equatorial Guinean island of Bioko.

ExxonMobil's Zafiro field, which was discovered in Block B close to major Nigerian oilfields in 1995, quickly overtook Alba in terms of output and is believed to still yield more than Ceiba. Field development was fast tracked despite the fact that it was considered to contain just 35m barrels of economically recoverable crude oil before production began. Today, ExxonMobil holds a 71.25% stake in the block production-sharing contract (PSC), Devon Energy 23.75% and the government of Equatorial Guinea the remaining 5% equity. Before the Ceiba find offshore Rio Muni, Equatorial Guinea was considered of limited interest to the oil and gas sector, and most activity and indeed production was concentrated on areas closely related to the Niger Delta.

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However, Triton Energy was attracted by the country's deepwater prospects and it was here that the Ceiba discovery was made, prompting a major reassessment of the country's hydrocarbon prospects. That the find was made just as more general interest in deepwater Gulf of Guinea was beginning to erupt, ensured that Equatorial Guinea's discovery hit the industry headlines.

Triton Energy's Equatorial Guinean assets proved too much of an attraction for large oil companies to resist and the company was taken over by Amerada Hess for $3.2bn in 2001.

Production on Ceiba in Block G has increased less rapidly than expected since 1999 and so the US independent drew up plans to boost production on the field and also to invest in new exploration on the rest of the block. In August 2004, the government of Equatorial Guinea approved a $1.1bn development plan that is expected to yield substantially increased output from the block by the end of 2007.

Total national oil production rose rapidly from just 17,000 b/d in 1996, on the back of the development of the Zafiro field, before doubling between 1999 and 2001 to 200,000 b/d, partly as a result of production on Ceiba but also as a result of the continued development of Zafiro. …