Exxon to Exit Equatorial Guinea

Exxon Mobil Corp will wind down oil manufacturing in Equatorial Guinea and go away the West African nation after its license expires in 2026, two sources near the matter instructed Reuters. 

The departure displays a wider transfer by main oil producers to scale back crude manufacturing in West Africa and shift investments to lower-carbon pure fuel growth on the continent, and to extra profitable initiatives within the Americas. 

“It’s a excessive value area the place carbon emissions are an issue as properly,” mentioned Gail Anderson, analysis director for Sub-Saharan Africa at power consultants Wooden Mackenzie. 

Exxon has reduce its output within the nation to lower than 15,000 barrels of oil per day (bpd) by way of current manufacturing unit Serpentina, one of many sources mentioned on Monday on situation of anonymity to debate private info. 

It evacuated workers from the offshore manufacturing platform Zafiro this 12 months as a result of water coming into the growing old vessel. 

Europe, which has been searching for different oil suppliers after sanctions had been imposed in opposition to Russia this 12 months, is the primary vacation spot for Equatorial Guinea’s oil exports. 

AGING OILFIELDS 

Exxon’s oil output in Equatorial Guinea, a member of the Group of the Petroleum Exporting Nations (OPEC), peaked at greater than 300,000 barrels per day (bpd) eight years in the past and has been declining since. 

Exxon has been making an attempt to promote its Zafiro operation since 2020. The corporate final 12 months pumped about 45,000 bpd in Equatorial Guinea, in another country’s whole manufacturing of 93,000 bpd. Africa is struggling to fulfill OPEC quotas because of the lack of investments in crude manufacturing. Output from its high two producers – OPEC-members Angola and Nigeria – sank by a 3rd to 2.1 million bpd in October from 3.2 million bpd in 2019. 

Since 2013, it has declined 41%. The area’s share of oil money flows is also falling, a examine by consultancy Deloitte discovered. For Center East and African oil producers, money has dwindled to 30% of worldwide flows within the final two years, from 50% between 2010 and 2020. 

International oil producers Chevron Corp, Shell Plc and Exxon have retreated from Nigeria as a result of rampant ranges of oil theft, promoting their property largely to native firms. 

Nigeria’s output is at a 32-year low and the nation this 12 months slipped behind Angola as Africa’s largest exporter. TotalEnergies additionally exited Angola earlier this 12 months. 

SHIFT TO AMERICAS 

As crude output in West Africa shrinks, manufacturing within the Americas is predicted to develop to twenty-eight million bpd subsequent 12 months, up 2.3 million bpd from pre-pandemic ranges, OPEC estimates present. A lot of the rise comes from the USA, Canada, Guyana and Brazil, among the locations the place Exxon has elevated spending on oil output. 

Exxon has determined to decommission Zafiro and tow the platform away, probably subsequent month, one of many individuals mentioned. Future income from Zafiro wouldn’t have lined the price of repairs, the particular person mentioned. Exxon might recuperate a few of Zafiro’s manufacturing and attain about 25,000-30,000 bpd by including a 3rd platform referred to as Jade, pending authorities and firm approvals, one of many individuals mentioned. 

NAMIBIA AND NATURAL GAS 

Whereas crude oil manufacturing wanes in West Africa, the continent’s liquefied pure fuel (LNG) future is on the rise and fossil gasoline output might develop elsewhere in Africa. 

Main producers are investing in fuel and LNG as Europe seems to switch provide from sanction-blocked Russia. Rising demand globally might lead to a 30% rise in fuel manufacturing in Africa by the tip of the last decade, Deloitte mentioned. 

Mozambique exported its first LNG cargo earlier this month from the $8 billion Coral South floating LNG consortium led by Italian oil agency Eni  and Exxon. 

Chevron final 12 months exported the primary LNG cargo from the Alen fuel challenge it operates in Equatorial Guinea.

Libya and Algeria produce oil at decrease value ranges and will hold attracting investments in the event that they take measures to scale back carbon emissions from present operations, a examine by McKinsey and Firm consultancy discovered. 

Promising reserves of oil and fuel have been found in Namibia, with appraisal wells anticipated to be drilled within the first half of subsequent 12 months, Wooden Mackenzie’s Anderson mentioned. 

“It could possibly be the subsequent Guyana,” she mentioned, referring to the South African nation that’s residence to the world’s largest oil discovery previously decade. “The alerts are very optimistic.” Shell and Whole Namibia oil discoveries possible whole billions of barrels.

(Reuters – Reporting by Sabrina Valle; Enhancing by Richard Chang)