The Energy Sector of Equatorial Guinea
Download the presentation of H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, on The Energy Sector of Equatorial Guinea. You can read his keynote speech below.
To all my fellow African energy ministers and government officials,
To all our peers and partners in Africa’s oil and gas investment community,
Distinguished delegates, ladies and gentlemen,
Today, I have the distinct pleasure to talk to all of you about the State of Africa’s oil and power industry. We know that the last 18 months have been especially challenging for our industry. A sustained decline in the oil price forces everyone to make difficult decisions and painful adjustments. For oil companies, that comes in the form of a lower share price and unfortunate layoffs of workers. Portfolios must be consolidated and some assets need to be relinquished. For Africa countries that rely on oil and gas as the engines of economic growth, we must often come terms with stagnation or even outright recession. Crucial infrastructure projects which are critical to the economic growth of our country must either be delayed or canceled. Losses of tax revenues result in the cutting of social welfare programs in health and education that are vital to the improvement of our societies.
In my country of Equatorial Guinea, new oil price realities forced us to revise our short-term fiscal program. We introduced a comprehensive package of economic and structural measures that allowed us to achieve a stronger position. We are confident that we responded before it was too late and that we are moving in the right direction.
A persistent market slump like the one we have been witnessing ultimately calls into question the sustainability of our industry and the known and unknown challenges we must face. But I am here today to report that the worst is behind us, that downturn strategies have been successfully put into place and that a steady market recovery is well in sight. We have learned some valuable lessons in the last 18 months, not least among which how to operate more efficiently in a lower price environment. And we have also been reminded that our destinies are shared and that we must continue working together and pushing for progress.
Africa’s oil and gas industry is one that is experiencing profound change. The circumstances of many of our countries are improving and much of that is thanks to the responsible management of our oil and gas resources. To sustain this important legacy, however, we must continue investing in the development of our resources. Africa has a wealth of untapped oil and gas but the investment to realize the continent’s full resource potential is not sufficient. We must explore more, we must do more than simply scratch the surface. The energy necessary to propel the next 25 years of prosperity is under the ground, we are sure of it. We must continue telling the African story to the world and selling the dream of discovering oil and gas to the international finance community. It’s true, there is a lot of competition out there, but we should press forward knowing that the investments must measure equally with the opportunity. That the rewards of working here far outweigh the risks.
In the last 10 years, a number of African countries have begun producing oil for the first time – including Mauritania (2006), Ghana (2008) and Mozambique (2014). Following the example and the experiences of their African peers, they were able to build modern oil and gas industries that take into account important considerations such as developing a national workforce, investing in technical training and knowledge transfer, promoting indigenous companies, building infrastructure and allocating resources for domestic use. In the next 10 years, other countries such as Uganda, Kenya, Senegal and maybe also Namibia will join the ranks of African oil producers. It is our responsibility to unite as African countries to offer them and each other the support they need to prosper and remain competitive for outside investment.
When we talk about investment, though, we cannot only be focused on outside the continent as we always have in the past. We must admit that our self-reliance will be also be achieved from within. That we must enable the rise of local banking and finance institutions to become a greater part of the funding equation, that indigenous companies must be a greater part of the exploration and production equation. We must demand more from our local institutions and trust that they have the capability to excel. We can learn from the experiences of Nigeria, a country where several great indigenous E&P companies acquired marginal fields from foreign firms and are now successful oil and gas operators in their own right.
When we talk about the energy sector, we are often too preoccupied with oil and not enough with gas. Many companies come into a country seeking oil but shareholders are disappointed when they discover gas. With an oversupply of gas flooding the global market, the viability of African LNG projects are suddenly called into question and financial investment decisions are inevitably delayed. But let me say that an abundance of cleaner-burning, affordable gas is a great thing for Africa. Let us not forget the critical role that gas can play in the industrial development of our countries. Gas as a feedstock for producing petrochemicals and even fueling cars. Gas as a source of electricity to power our homes and offices. Given the wealth of resources available in Africa, it is unacceptable for us to continue living with such drastic electricity shortages. I would like to call on our industry partners to work together to put the policies in place to enable large-scale power projects, to allocate natural gas reserves for domestic uses and continue collaborating through regional power pools to ensure a consistent source supply for everyone on the continent.
We should congratulate countries like Mozambique and Tanzania for putting national interests first and not just the biggest profit. LNG exports will have a transformative impact on their economies, but so will utilizing that gas for local power and industry. To all countries that are thinking about how to utilize their resources, we should all encourage them to reserve enough energy for domestic purposes.
In Equatorial Guinea, for example, gas has been a large contributor to our power supply as we look forward in 2017 to producing enough electricity to feed all corners of our country and reserve enough to supply our Central African neighbors. Earlier this year, Equatorial Guinea inaugurated a pioneering compressed natural gas plant that powers a fleet of public buses. By 2019, we also plan to use gas as a crucial feedstock in a world-class petrochemicals project called REPEGE that is being developed on the coast of our Bioko Island. Let us remember that the value of our natural resources rests not just in exporting them in their crude state, but also in utilizing them in their refined and processed form.
The last point I would like to make today is that investing in local resources isn’t just about oil and gas, it’s about investing in our people. The market downturn should compel us to invest more in building local capacity and knowledge not less. We must continue investing in our local capacity because we know that sustainable oil and gas industries make sustainable countries.
In Equatorial Guinea we are proud to have again signed an agreement with the Southern Alberta Institute of Technology (SAIT Polytechnic) to provide comprehensive technical training to Equatorial Guinea nationals in Calgary, Canada. It is workforce development programs like this one that have helped us boost national capacity and promote local content. It is a reminder that the oil and gas sector is driven by people and technology. Through technical training programs, we can invest in both and empower our nationals with the technical tools they need to lead the next generation of our nation’s oil and gas industry so we can be better stewards of our resources.
On behalf of the Government of Equatorial Guinea, I thank you for this opportunity. We invite you to join us this afternoon in this room when we have the occasion to present more information about our great country. You will get to learn about the players and the projects and what makes Equatorial Guinea such a special place to invest.
Thank you very much.