Boston, MA -- (SBWire) -- 03/18/2013 --BMI View: While Equatorial Guinea could be well positioned to benefit from increasing interest in deepwater exploration off West Africa, at present, we maintain a bearish long-term outlook for its oil sector. However, with recent exploration success holding the potential that Ophir may prove up the resource base to support an expansion of the country's LNG export terminal, we are more optimistic in our forecast for gas production. Yet, we highlight outstanding uncertainty regarding the project's financing, the size of resources underpinning the project, and potential export markets to be targeted as obstacles that any LNG expansion project must overcome.
The key trends and developments in Equatorial Guinea's oil & gas sector are:
- BMI expects oil production to reach 317,000 barrels per day (b/d) in 2013, before peaking at 320,500b/d in 2015. Production growth will be driven almost entirely by new production from Noble Energy's Aseng and Alen developments. This will offset declining output from the flagship Zafiro field. Beyond 2016, we anticipate a steady decline in production unless further investment is made in exploration and production (E&P).
- Equatorial Guinea remains overly dependent on hydrocarbons production, which generates 78.0% of GDP, 89.0% of tax revenue and 97.0% of exports, according to BMI data.
- Ophir's latest offshore discoveries at Block R pose upside risk to our gas production forecasts. A decision to commercially develop the fields in support of an LNG expansion would cause us to revise our figures upward. Absent a decision to develop Block R, or additional exploration success, we expect gas production to reach 7.1bcm in 2013 and fall to 6bcm by 2022.
- Continued interest in West Africa's highly prospective deepwater should see interest in exploration of the country's offshore sustained into 2013, with the potentially commercial discoveries such as those at Block R likely to whet the appetite of those with an existing presence or interest in the region.
- However, the country's business environment, with a strong reputation for corruption, may be an obstacle to new investment.
- Oil and gas demand is set to rise steadily over our forecast period, with demand for the latter set to increase at a faster rate as the economy continues to expand and domestic infrastructure improves. BMI forecasts consumption of 1.8bcm in 2013, rising to 2.7bcm by 2022.
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Recently Released Market Study: Equatorial Guinea Oil & Gas Report Q2 2013
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