US companies are reportedly expected to invest $2.4bn in Equatorial Guinea’s oil and gas sector to raise production and drill new wells.
The companies are set to drill 11 wells from next year, Reuters reported citing an unnamed Equatorial Guinea oil ministry source.
The development comes after Equatorial Guinea oil minister Gabriel Obiang Lima warned in September that the oil companies could risk not receiving extensions of existing licences unless they collectively invested at least $2bn in the country.
Equatorial Guinea held talks with the US firms in Frankfurt, Houston and Dallas, for three weeks.
The source was quoted by the news agency as saying: “We have secured $2.4bn worth of investment that will go into drilling, the backfill project and increasing production, which has been declining.”
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Equatorial Guinea is a major oil producer in Sub-Saharan Africa and its economy is mainly driven by oil and gas exports.
For future production, operators will have to pool supply from stranded gas fields in the country and the wider region.
The source added: “You are going to see between $300m and $400m capital investment between Noble, Atlas Petroleum, Marathon and Glencore and all the partners in Block O and I for this backfill project, so you are going to be guaranteed LNG to 2030/35.”
In addition, the government has been engaged in talks to secure LNG off-takers as Shell’s exclusive arrangement will come to an end in 2020.
The source further stated: “There are no negotiations with Shell because the test the government had for Shell was whether they would invest and they have declined and shown no interest to invest.”
Meanwhile, the government is expected to officially launch a new oil and gas exploration round in April next year.