Equatorial Guinea will launch a new oil and gas exploration bidding round early next year and may refuse extensions of existing licenses to oil companies unless they collectively invest a minimum of $2 billion in the country, the oil minister said on Thursday.
Reuters reported Oil minister Gabriel Obiang Lima as saying the license extensions, which would be negotiated later in September and October, could impact operations by U.S. oil major ExxonMobil, Kosmos Energy, Marathon Oil and Noble Energy.
“We expect all of them to have an understanding that we do want serious investment in activities and if that is not happening … some of the extensions they will be asking for will not be handed over,” Obiang Lima told Reuters at an African oil and power conference.
This comes as Nigeria, Africa’s largest crude producer, recently faced a massive setback in attempts to reform it’s oil sector and attract the needed investment, when President Muhammadu Buhari withheld assent to the Petroleum Industry Governance Bill (PIGB) 2018.
Equitorial Guinea, an OPEC member and Sub-Saharan Africa’s third-largest oil producer, relies mainly oil and gas exports to power its economy.
“The objective is that we have a large amount of foreign direct investment in country. The expectation is a minimum of $2 billion must be invested across the entire industry, from operating, management and drilling,” he said.
Obiang Lima also said the country would be launching a new bidding round in January for oil and gas exploration in both onshore and in ultra-deep areas.
At the same time it will launch a bidding round for gold, diamonds and bauxite, following an aero-magnetic survey of half of the continental Rio Muni area where around 2,000 boreholes to get samples were drilled.
According to Reuters, Obiang Lima said, “There will be three options on the bid. There will be full exploration on areas where there is no data, exploration on areas that we already have data and samples then on areas with already confirmed resources.”
Experts have expressed shock and worry that in spite of the established losses prevalent in the Nigerian oil and gas industry, the oil sector reform law which was passed by parliament was vetoed by the president.
Analysts say an estimated $15 billion in fresh investment that should have come into Nigeria is lost to other countries due to the uncertainty in the sector.
According to CISLAC the refusal to assent to the bill is a big failure on the part of the Buhari-led government and a lost opportunity to reform the sector and transform it to meet with global standards.