Equatorial Guinea will approve a new hydrocarbon law on Monday after crude production collapsed to just 20,000 barrels per day in September, down from roughly 140,000 bpd in 2020.
The 120,000-bpd loss has reduced OPEC’s smallest producer to a fraction of its former output and contributed to an economy the International Monetary Fund expects to shrink 1.7% this year.
Hydrocarbons Minister Antonio Oburu Ondo said the new law will make contractual terms more flexible and offer oil companies a wider range of structures based on their appetite for risk. The government wants companies drilling again in producing fields and exploring acreage that has attracted little capital in recent years.
Equatorial Guinea has not set a production target. Its immediate measure of success will be drilling campaigns.
The government is also willing to negotiate directly over available blocks and has created special economic zones to attract investment. Those incentives will have to compete with mature fields, limited recent exploration and the departure of ExxonMobil, which exited the country in 2024 after nearly three decades.
Chevron remains active in Equatorial Guinea’s gas sector. State oil company GEPetrol agreed earlier this year to increase its stake in the Chevron-operated Aseng project from 5% to 32.55%. Gas from Aseng is expected to feed the Punta Europa processing and LNG complex and other planned developments.
The Iran war has increased the value of African supply routes that avoid the Strait of Hormuz and the Red Sea. Producers elsewhere on the continent have gained attention from buyers looking for oil and gas outside the Middle East.
Equatorial Guinea currently has little additional crude to sell into that market.
Production has fallen by more than 85% in six years. The first test for the new law will be whether more flexible terms produce actual drilling commitments in existing fields and unexplored blocks before another tranche of mature production disappears.
By Julianne Geiger for Oilprice.com
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