New Energy research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 09/09/2013 --Rising interest in the deepwater potential of West Africa leaves Equatorial Guinea favourably placed, with proven hydrocarbon potential and a number of active operators. While we see opportunity for gains in oil output over the near term as new fields come online, the gains are set to be marginal and the increase in output temporary. We forecast that output will trend lower over the latter half of the decade, notwithstanding the upside for any new commercial discoveries. On the gas side, recent exploration success suggests Ophir has firmed-up the resource base to support an expansion of the country's liquefied natural gas export capacity, which could come in the form of a floating terminal or a new train at the existing export facility. However, a decision is not imminent and given uncertainty regarding financing and potential export markets amid rising competition for market share, there remain a number of obstacles to overcome as the planned 2014 decision date approaches.

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The key trends and developments in Equatorial Guinea's oil and gas sector are:

- BMI expects oil production to reach approximately 325,000 barrels per day (b/d) in 2013, before peaking at 331,200b/d in 2016. 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) with new discoveries being brought online.
- Equatorial Guinea recently announced the awarding of a number of onshore and offshore blocks to small and mid-sized players. Traditional international oil companies (IOCs) and players from Brazil, Africa, and Asia were among the winners. In announcing the awards, officials said other blocks would be put up for auction as additional 3D seismic data was made available.
- Equatorial Guinea's deepwater continues to attract operator interest. In May, Noble and junior PA Resources reported an oil discovery on Block I. Further investment, including drilling, is planned by other firms active offshore. Supported by high prices, we expect deepwater drilling to remain a key strength of the country's oil and gas sector on the back of rising interest in West Africa's offshore potential.
- 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. Concerns regarding the country's business environment, where high levels of corruption are often suggested, are evidenced by an announcement form the Norwegian Sovereign Wealth Fund that officials are considering divesting shares in oil and gas companies that operate in Equatorial Guinea given longstanding concerns that the country's oil wealth has not been used to alleviate chronic poverty.

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