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Equatorial Guinea’s Ministry of Mines and Hydrocarbons announced that it will extend exploration licenses for two years and relax capital expenditure requirements for E&P companies amid the low-price climate and reduction in oil demand caused by COVID-19.

The extension of time and resources will particularly aid US companies, which represent the lion’s share of investment in Equatorial Guinea’s energy sector and are currently in the early stages of exploration and seismic interpretation of several key offshore blocks.

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“We learned from the crisis in 2014/2015 that we need to give extensions to exploration companies to ensure that they save cash,” said Gabriel Mbaga Obiang Lima, the Minister of Mines and Hydrocarbons.

The minster continued: “Liquidity is very important right now. The last thing we want is for [companies] to decide that it is not economical to operate in-country.”

Retaining key explorers and producers in-country reflects Equatorial Guinea’s broader priority to drive global investment into the country, as encapsulated by its 2020 Year of Investment campaign.

Targeting $1 billion dollars in FDI, the year-long initiative, led by the Ministry of Mines and Hydrocarbons, advances the country’s agenda of energy cooperation and investment, fortified by several landmark energy deals to be signed in 2020.

Extension of exploration licenses

Dallas-based Kosmos Energy will receive an extension to analyse regional data and continue geological surveys of its interests in four offshore exploration blocks (EG-21, EG-24, S and W), with a view to resuming drilling programmes and yield discoveries in 2021.

Houston-based VAALCO Energy will also receive an extension to develop strong prospects identified in offshore Block P, in which it holds a 31% participating interest.

African independent Atlas Oranto, which recently established an outpost in Houston, will continue its development of Block H, in which Phase 1 of the production-sharing contract has been completed and the highly prospective Aleta asset has been identified.

The Nigeria-based explorer also holds a stake in Block EG-02, in which initial interpretation of seismic survey indicates some of the largest hydrocarbon reserves in the region and depicts similarities to discoveries in Blocks I and O in the Douala Basin.

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Simultaneous inversion of pre-stack seismic data, along with coherence and spectral decomposition processing has been completed, resulting in the identification of a major upper cretaceous deep-water fan system, comparable to the Liza discovery offshore Guyana.

While some elements of work programmes will be delayed by COVID-19, other key energy projects remain on track, such as Noble Energy and Marathon Oil’s Alen backfill project.

According to the Africa Oil & Power Conference, pipelines for the development have already been installed, and gas feed from the Alen and Aseng fields to onshore processing facilities at the EG LNG Plant in Punta Europa is set to come online by November.