E/Guinea Targets Foreign Investment, Adopts New Petroleum Regulation
Equatorial Guinea has announced the adoption of the new Regulation of Petroleum Operations, Regulation No. 2/2020 of June 15th, 2020. The country’s Ministry of Mines and Hydrocarbons (MMH) said the new regulation modernizes the country’s existing regulatory framework, and is intended to maintain Equatorial Guinea’s attractiveness for foreign investors.
It Regulation notably covers key matters such as the extension of the productive life of mature fields though mechanisms allowing operators to generate greater value from these assets; the exploration of marginal and onshore fields along with investments in deep and ultra deep water acreages; the monetization of gas and the development of the petrochemicals industry, along with further integration of the national workforce and local companies across the value-chain.
The new Regulation is seen as a pillar of Equatorial Guinea’s recovery strategy post Covid-19, and clarifies several aspects of petroleum operations in the country. It also comes as Equatorial Guinea pushes for additional local participation across the value-chain, and is developing several gas monetization and downstream projects. The Regulation notably stipulates that refining, petrochemicals and commercialization activities can be realized under a specific license granted by the MMH (Article 93) on the basis of technical and financial capabilities notably.
It also strictly prohibits gas flaring, except under very specific circumstances, and stipulates that Field Development and Production Plans must always be designed in such a way as to allow the use, conservation or commercial exploitation of associated gas (Article 149). It also clarifies new rules and frameworks on exploration and production from mature and marginal fields, defining the former as a field that has entered into decline and is no longer economically viable, and the former as a field that has produced 90% of its proven hydrocarbons reserves (Article 41). Such fields will benefit from 10-year contracts, which can be renewed every five years after study and assessment by the MMH.
“This new Regulation gives an opportunity to the Republic of Equatorial Guinea to continue being a world reference in the hydrocarbons sector. To maintain our position, we must be prepared, with updated norms and policies, to respond to the great challenge that the recovery of commodity prices, the creation of employment and the execution of projects after the Covid-19 pandemic will pose for the sector,” declared Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima.
“It is for this reason that the Ministry of Mines and Hydrocarbons, in its desire to continue betting on the growth and economic diversification of the country, has decided to update the regulations to answer all the questions of the industry, as well as create a space of trust with all the actors in the country’s hydrocarbon sector,” he added.
Chibisi Ohakah, Abuja