"Equatorial Guinea Oil & Gas Report Q2 2016" Published

Equatorial Guinea's oil output will see smaller decline rates over the coming years on the back of several smaller projects. However, maturing fields and lack of new significant discoveries will continue to push the production volumes to the downside over our entire forecast period . Ophir's Fortuna FLNG project will be the most important upside to the country's gas production and net exports. While the company targets a FID by mid-2016, we highlight risk s to the project due to slowing global demand for LNG and the large wave of LNG projects coming online within the coming years.

Key Trends And Developments

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Equatorial Guinea is forecast to see its oil and gas reserves stagnate or increase slightly over our forecast period to 2025 owing to maturing fields and lack of new significant discoveries. There is upside potential coming from a string of recent exploration activities offshore, as well as the new reduced-oil price environment attracting investors to lower-risk and lower-cost ventures such as Equatorial Guinea. This is reflected in our slightly improved oil reserves outlook this quarter for the coming years.

In mid-January 2015, the Equatoguinean government ratified the production sharing contract for Block EG-06, signed with ExxonMobil and GEPetrol.

We expect a smaller decline in production over 2016-2017 relative to recent years thanks to increased production from the Aseng and Alen projects and the Alba B3 Compression unit. However, falling volumes from mature fields will leave overall production in decline over the entire forecast period to 2025.

Equatorial Guinea's gas production stood at an estimated 6.28bcm in 2015 and this figure is expected to remain at similar levels until 2019, when Ophir Energy's Block R is expected to come online. This will temporarily boost the country's gas output to more than 8.6bcm before slowly declining again.

In June 2015, Ophir Energy de-risked its Fortuna floating liquefied natural gas (FLNG) project in Equatorial Guinea. This project will process gas reserves from offshore block R. Front end engineering design studies are under way for both the upstream and mid-stream elements of the project, with a final investment decision expected in mid-2016 and delivery of first gas in mid-2019.

Ophir has said it is finalising offtake agreements for Fortuna FLNG and is in the process of signing heads of agreement (HoA) for liquefied natural gas (LNG) offtake as of end 2015.

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