Extend the value chain

This article was originally published in the Africa Energy Series: Equatorial Guinea book.

Equatorial Guinea has a successful history of implementing large gas utilization projects.
A new crop of projects, some with regional reach, will be built on the success of the Punta Europa gas complex.

The upstream sector, while continuously attracting new entrants and new projects, is nevertheless fully developed, with consistent oil and gas production, and fair and balanced hydrocarbons regulations. Equatorial Guinea has been a strong presence as a global exporter of both oil and gas for decades. A top priority for Equatorial Guinea now is the sustainable development of the entire value chain — linking upstream production with industry, electricity production and economic diversification.

Equatorial Guinea’s drive to monetize gas has been key to the development of industry, especially in the last two decades, with nearly 50 percent of the country’s annual hydrocarbons production comprised of dry gas, condensate and natural gas liquids.

Gas legacy

The Punta Europa gas complex, which first came online in 2001 with the Atlantic Methanol Production Company, launched Equatorial Guinea onto the global gas scene. The world-class integrated gas complex processes natural gas into a variety of products, including liquefied petroleum gas, compressed natural gas, methanol and liquefied natural gas. CNG is used domestically to power vehicles, making Equatorial Guinea one of the first countries in Africa to implement CNG for that purpose. LPG, while exported, is also used domestically, distributed on the island and the mainland for a variety of both commercial and residential uses. EG LNG, housed within Punta Europa, is the driving force behind Equatorial Guinea’s gas exports. LNG from Pun- ta Europe is exported, making Equatorial Guinea one of few countries in Africa to successfully export LNG. The Fortuna FLNG project, when it comes online in 2020, will solidify Equatorial Guinea’s spot as a top African LNG exporter.

And the vision for processing gas won’t end with Punta Europa. Equatorial Guinea is working to develop REPEGE II, a petrochemicals zone that will use gas in the creation of paint, air fresheners, manufacturing, adhesives, plastics, packaging materials, cosmetics, fertilizers and ammonia. The petrochemicals revolution will drive industrialization and further diversify the country’s economy, as it seeks to grow the downstream sector.

Domestic utilization

While much of the country’s gas production is exported, gas is and will continue to play a vital role in the downstream value chain, including the development of gas-to-power projects. Equatorial Guinea has ambitious power generation goals — seeking to not only provide universal electricity access domestically, but export electricity throughout the region, especially to neighboring countries Cameroon and Gabon, both of which have power deficits. The country is using all of its resources available, from gas to hydro, to power this vision.

Included in the power portfolio is the Bata Power Plant, which completed a transformation from heavy fuel oil to both fuel oil and gas in 2016. The gasification of the plant aligns with Equatorial Guinea’s vision to burn cleaner fuels and monetize its gas resources. The Djibloho Hydroelectric Dam, constructed by Sinohydro, provides 120 MW of power. The Malabo Turbogas gas-fired power plant at Punta Europa provides 154 MW of capacity, after China Machinery Engineering Corporation led the expansion of the plant’s capacity. Overall, the country has installed 390 MW of capacity — more than half of which is powered through gas — and has the highest electricity access rate per capita in the region.

Equatorial Guinea’s success in gas-to- power has coincided with an African-wide effort to use gas. In the last two decades, the continent’s proven gas reserves have more than doubled and the resource is seen as a key answer to Africa’s power deficit. Countries like Mozambique and Tanzania are seeking to develop newly-discovered gas resources, while mature producers like Nigeria and Angola are working to monetize (instead of flare) gas resources. And as these countries, from the legacy producers to the new entrants, seek to sustainably develop gas resources, Equatorial Guinea is a leader in strategies that work. The country has signed agreements with South Sudan, Ghana, Burkina Faso and Mozambique in a drive to assist in the development of Africa’s gas resources for Africa.

Downstream oil projects

The development of the downstream sector for oil, is less advanced than the gas processing industry. Since Equatorial Guinea does not have a refinery, all of the country’s crude oil is exported to other markets. There are plans in the works, though, to also diversify the downstream oil sector. Nearing construction, the Bioko Oil Terminal will provide hydro-carbons storage for Equatorial Guinea and the entire Gulf of Guinea region — storage that is desperately needed. Additionally, Equatorial Guinea is in discussions with third parties for the construction of a small-scale oil refinery at Mbini. Both projects will boost the development of the country’s downstream oil sector, and both projects are greatly needed in western Africa. Refining in Africa in general, and West and Central Africa in particular, is underdeveloped. With the storage terminal opening in the near future, and with a refinery in the works, Equatorial Guinea is set to meet both the downstream and mid- stream needs for crude oil. Projects like the Bioko Oil Terminal will finally round- out the country’s crude value chain, and will also provide for the energy needs of the entire Gulf of Guinea.

The value chain on the gas side is al- most fully developed, and the country continues to advance state-of-the-art gas projects that will further establish it as a leader in gas monetization – developing a wide-range of gas projects, from CNG to gas-to-power, and using its natural gas resources to power the economy both through exports and domestic usage. Indeed, Equatorial Guinea’s ability to bring electricity to all corners of the country, using both gas and hydro resources, is one of Africa’s great power generation success stories.

Equatorial Guinea has laid a solid foundation for the development of its energy resources. Investors entering the country, from the upstream to the downstream, are able to build on this legacy.