AFRICANEWS

Equatorial Guinea

From grass to oil

Economy

Equatorial Guinea is a small West African country that was virtually unknown. Even in Africa not many people even knew its exact location.

In 1992, this tiny country with a population of half a million was officially one of the smallest and poorest in the world, with a per capita of only US$330 and no petroleum production. It comprises the main enclave of Rio Muni, the offshore Island of Bioko and Annonbo, the coastal Islands of Corisco, Elobey Grande, Elobey Chico and other small adjacent Islands which used to form the colony of Spain.

Like many impoverished countries, it was dependent on loans and aid from the donor community. But this is an optimistic "but" in that same year, the fortunes of this small country turned around for the better. Walter International commenced modest development of the Alba gas and ushered Equatorial Guinea into the petroleum era. Since then, there has been no turning back. Production has now been expanded to over 100,000 barrels per day, with more expected to flow from new discoveries, including the latest, Triton's La Ceiba Field which in early October 1999 flowed oil on test at over 12,000 barrels per day.

“Equatorial Guinea is now established as a West African oil producer and has the fastest growing gross national product on the continent", says Cristobal Manana , Mines and Energy Minister. The Minister was delivering a paper titled "Stimulating national economic development through oil and gas success in Equatorial Guinea" at the 5th Oil and Gas Conference and Exhibition 2000 held in Accra recently. This year's conference was jointly organised by the Ghana National Petroleum Corporation and the United Nations Conference on Trade and Development(UNCTAD).

The theme of the conference was "Africa, the Petroleum Province of the Twenty First Century". The theme of the conference couldn't be more appropriate, coming at the time West Africa has attracted world attention as a petroleum destination. During the discussions speaker after speaker highlighted West Africa's deepwater potential with the Gulf of Guinea potentially carrying the largest deposits.

The Gulf of Guinea is increasingly becoming an important contributor to global oil production, accounting for around six percent of total production in 1999. In this context, Equatorial Guinea is a small, albeit growing contributor to the region's oil production following Nigeria, Angola, Gabon and Cameroon.

The past two years has seen a lot of intensive activity in West Africa, with latest discoveries in Equatorial Guinea, Cameroon and La Cote d' Ivoire. According to some reports from the conference, great potentials exist along the Cassamance area in Senegal. The discovery of oil has become something of a national pride. Oil now determines to a large extent, a country's position in international affairs. For this reason many countries in the developing world are spending huge sums of money in search of the commodity. For Equatorial Guinea, the hitting of oil has not only boosted its economy, it has also made people everywhere to take a second look at the world map to try and locate it.

The Minister said production activity is already manifesting itself in the macro-economic indicators of the country. "GNP is rising fast (71 percent in 1998 against 22 percent in 1997) and the value of exports was expected to have exceeded US$500 million in 1999, up from around US$50 million in 1990", says Manana.

Manana said at the moment, five companies -CMS Oil and Gas, Ocean Energy, Mobil, ELF and Triton have licences to operate, while licences for another three are pending. In all capital investments in Equatorial Guinea's petroleum sector are expected to exceed $5billion over the next five years by which time production could be in excess of 300,000 barrels per day with proven development reserves around 800 million.

One notable feature of the country's development according to the Minister is that much of its economic activity remains in private hands with relatively modest government revenues. The country's recent economic fortunes have not come without pain. The Ministers notes that petroleum exploration is putting a lot of strain on the country's infrastructure. He said though ad hoc measures have been found, long term projects need to be put in place to curtail the situation.

Though a fairly large percentage of world oil is produced in Africa only a small percentage is left behind for local consumption. Statistics say Africa is well endowed with oil and gas resources, accounting for about 10 per cent of global oil production and 6.4 per cent of reserves. Africa also accounts for about seven percent of global oil reserves. Sadly, even though the continent produces a significant amount of oil, experts say Africa consumes only three per cent of total output. The rest are transported out and used to create wealth for the rest of the world. The reason is the low GDP and low level on industrialisation on the continent.

Mr Tsatsu Tsikata, the Chief Executive of the Ghana National Petroleum Corporation says the oil industry can only be developed if the huge African population becomes the market for African oil and gas.

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