Chevron Corp. and Equatorial Guinea’s state-owned GEPetrol have signed production sharing contracts (PSCs) for offshore blocks EG06 and EG11, the African Energy Chamber (AEC) has reported.
Exxon Mobil Corp., the former owner of the licenses before exiting the Central African country, already made a discovery in Block EG06 last 2017 through the Acestruz 1 well.
“With the new PSCs, Chevron and GEPetrol will kick off a new exploration and production campaign at the blocks”, the AEC said in a statement. “The contracts include provisions on aspects such as minimum investments, exploration programs, sustainable development and benefits for the state, therefore outlining a clear development plan for the assets”.
“Situated in close proximity to producing Block B which houses the Zafiro field, the blocks are considered to be highly-prospective and are poised to play a major part in revitalizing exploration and production offshore Equatorial Guinea”, the industry group said. The AEC expressed confidence the new PSCs would help reverse hydrocarbon production decline in the OPEC nation.
“As a major oil and gas producer with proven offshore plays, Equatorial Guinea has the potential to play an even greater role in supporting energy security in West Africa”, it added.
Equatorial Guinea has proven petroleum reserves of 1.1 billion barrels and proven natural gas reserves of 39 billion cubic meters (1.4 trillion cubic feet), according to data from the 2023 Annual Statistical Bulletin of the Organization of the Petroleum Exporting Countries (OPEC).
“Despite a proven track record of production, declines in mature fields and lack of investment in undeveloped assets has seen national oil output in Equatorial Guinea fall in recent years”, the AEC said. “To reverse this trend, the government is incentivizing investment in offshore exploration and the recent contract with Chevron and GEPetrol represents a notable step towards making a new discovery”.
Chevron is also investing in the country’s Gas Mega Hub (GMH) project through a joint venture with fellow Unites States company Marathon Oil Corp. (MRO). In 2023 Marathon announced it had penned a heads of agreement with the government and Chevron’s Noble Energy EG Ltd. to progress with the second and third phases of the production project. Phase One achieved maiden production February 2021 with the tieback of the Alen field to the Punta Europa processing and liquefaction facility.
“Phase II involves processing Alba Unit (MRO 64 percent interest) gas, from Jan. 1, 2024, under new contractual terms following the legacy Henry Hub-linked Alba sales and purchase agreement expiration at the end of this year”, Marathon Oil said March 30, 2023. “Phase II will materially increase MRO’s exposure to global LNG pricing and is expected to improve the Company’s E.G. earnings and cash flow significantly.
“Phase III of the GMH is expected to facilitate gas processing from the Aseng Field at Punta Europa facilities.
“Additionally, a recently established bilateral treaty on cross-border oil and gas development between E.G. and Cameroon provides other opportunities to further expand the GMH through fast-track monetization of cross-border wet gas fields”.
In its latest quarterly report, for January–March 2024, Marathon Oil said it had sanctioned two Alba infill wells. It expects to put the two wells into production next year.
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