1. Overview of Natural Gas Sector

1.1 A brief outline of your jurisdiction's natural gas sector, including a general description of: natural gas reserves; natural gas production including the extent to which production is associated or non-associated natural gas; import and export of natural gas, including liquefied natural gas (“LNG”) liquefaction and export facilities, and/or receiving and re-gasification facilities (“LNG facilities”); natural gas pipeline transportation and distribution/transmission network; natural gas storage; and commodity sales and trading.

Equatorial Guinea has an estimated 4.91 trillion cubic feet of proven natural gas reserves. The production capacity of gas has increased significantly by 5.73%, yearly, from 6.2 million cubic metres in 2015, to 7.75 million cubic metres in 2018, and is expected to continue to increase as new developments and projects are executed.

Equatorial Guinea is one of the first African countries to successfully develop and implement gas monetisation initiatives. The country's Gas Mega Hub Project provides the foundation for large scale gas commercialisation and could position the country as a regional gas leader. The project designed to harness unexploited offshore domestic and regional gas resources includes the transportation of gas from local fields and other African countries like Cameroon and Nigeria to the onshore gas processing and liquefaction facilities at Punta Europa and onward sale to the global gas market.

In the first phase of the project, the $330 million project to supply gas from the Alen field (Blocks O and I) for processing in Punta Europa was completed. In 2019, the Ministry of Mines and Hydrocarbons in Equatorial Guinea approved a 100 million USD offshore gas pipeline to the 70 km, 950 million standard cubic feet per day (mmscfd) capacity pipeline to transport gas from the Alen field. The second phase of the project will comprise establishing additional hubs across the region. Plans to implement this phase have already begun as of February 2022, and Equatorial Guinea and Nigeria signed a strategic memorandum of understanding (MOU) for the supply of gas from gas-rich Nigeria to Punta Europa's processing facility.

In 2022, central African countries, of which Equatorial Guinea is one, signed an agreement to construct an oil and gas pipeline network and hub infrastructures that aim to connect the Central African Economic and Monetary Community (CEMAC) member nations. When completed, the project, which will include the construction of three gas pipelines measuring about 6,500 km (4,000 miles), storage depots and LNG terminals, will boost the energy capacity across the region.

Also in the works is the project to increase the gas storage capacity at the Bioko terminal by constructing 22 storage tanks with a total capacity of 1.2 million cubic metres.

Equatorial Guinea also has an LNG terminal in Bioko Island. Construction of the 3.7 mmta production facility with one train was completed in 2007. It is important to mention the Fortuna FLNG project, the proposed construction of an FLNG terminal on block EG-27 (formerly Block R), which could significantly increase gas production in Equatorial Guinea. This project has suffered significant delays occasioned by inability to secure appropriate financing.

1.2 To what extent are your jurisdiction's energy requirements met using natural gas (including LNG)?

Equatorial Guinea's energy requirements are currently being met by two main energy sources – hydrocarbon and hydropower, and interestingly, its combined capacity far exceeds current local requirements. Hydrocarbons account for about 61% of the total energy consumed in Equatorial Guinea.

Equatorial Guinea is divided into two geographical regions: the mainland; and several islands, among which is the island of Bioko where the capital of the country is located. The island of Bioko is powered by the turbo-gas plant located in Punta Europa (Malabo), with an installed capacity of 154.2 MW, which provides energy to the entire island of Bioko through a 66 kV and 33 kV network.

According to data from the Ministry of Industry and Energy, in 2016, the demand for energy on the Island of Bioko was 79 MW, while the demand on the main land region of the country was 65 MW. However, in each region, production stood at approximately 154.2 MW, well above demand.

Throughout Bioko Island, except for the small hydroelectric plants of Musola 1 and 2, which are currently inoperative, electricity is mostly produced from natural gas through the Turbo-Gas plant. In the continental region, on the other hand, all electricity production is from the Djibloho Hydroelectric Power Plant.

Besides these two major plants, there are several ongoing electricity production projects that include natural gas fuel (such as the transformation from fuel to gas at the Bata terminal plant stations) and hydroelectrical sources (such as the Sendje plant, which could increase capacity by 200 MW).

Even though the production capacity exceeds local demand, only about 66.7% of the population (as at 2020) have access to electricity and this can be attributed to inadequate or dilapidated infrastructure.

1.3 To what extent are your jurisdiction's natural gas requirements met through domestic natural gas production?

Equatorial Guinea does not currently import natural gas. Therefore, all its natural gas requirements are met through domestic production.

1.4 To what extent is your jurisdiction's natural gas production exported (pipeline or LNG)?

Equatorial Guinea is a net exporter of natural gas. The country's domestic gas consumption is about 1.49 billion cubic metres and it exports more than 60% of its natural gas.

In 2021, its natural gas export was reported at 4,693.614 cub m mn, an increase from 2020, which was reported at 4,025.920 cub m mn. Its current natural gas export is reported at 6.686.728 (INEGE-2021) m mn.

Asia – India, in particular – and the Middle East are the biggest importers of Equatorial Guinea's natural gas.

2. Overview of Oil Sector

2.1 Please provide a brief outline of your jurisdiction's oil sector.

Production of crude oil and condensates has been decreasing rapidly since 2007 (by around 6%/year) to 8.8 Mt in 2020. It increased dramatically following the commissioning of the first field of Alba in 1996 and then the Zafiro field, reaching a peak of 19 Mt in 2007.

About 85% of production is in the form of crude oil and 15% as condensates. Crude oil production comes almost entirely from three fields – Zafiro, Ceiba and Okume – while condensates come from the Alba field. The continued fall in the production of oil in the country has caused concern in the industry as the country's economy relies heavily on the oil and gas industry. The industry accounts for 80% of the fiscal revenue and 60% of GDP. Measures are being taken to increase oil production including implementing new licensing rounds and putting together strategies to attract new investors.

Equatorial Guinea does not currently have any refining capacity. Nonetheless, there are plans to develop refineries in the country. The Equatorial Guinea government signed an MOU with the Democratic Republic of the Congo (DRC) in 2022 to jointly develop an oil refinery and storage facilities. Also, the national Oil Company, GePetrol, China Railway Construction Corporation and CIRDL signed an agreement for the development of a 20,000 bpd modular refinery.

2.2 To what extent are your jurisdiction's energy requirements met using oil?

Hydrocarbon and hydropower are the main sources of energy production in Equatorial Guinea. About 61% of the country's energy requirements are met using hydrocarbons.

2.3 To what extent are your jurisdiction's oil requirements met through domestic oil production?

Equatorial Guinea does not currently import crude oil. Therefore, all its oil requirements are met through domestic production.

2.4 To what extent is your jurisdiction's oil production exported?

Equatorial Guinea exports about 80% of its oil production.

3. Development of Oil and Natural Gas

3.1 Outline broadly the legal/statutory and organisational framework for the exploration and production (“development”) of oil and natural gas reserves including: principal legislation; in whom the State's mineral rights to oil and natural gas are vested; Government authority or authorities responsible for the regulation of oil and natural gas development; and current major initiatives or policies of the Government (if any) in relation to oil and natural gas development.

The principal legislations governing the development of oil and natural gas reserves are as follows:

  • Hydrocarbons Law No. 8/2006 November 3;
  • Ministerial Order 4/2013 June 20 on Petroleum Operations;
  • Ministerial Order 1/2014 relating to National Content in the oil and gas sector;
  • Ministerial Order 1/2018 May 14, which regulates the registration and authorisations of companies in the sector; and
  • Regulation No. 2/2020 June 15 on Petroleum Operations revoking the previous regulation approved.

The Hydrocarbons Law stipulates that all hydrocarbon reservoirs in Equatorial Guinea, including its inland waters, territorial waters, exclusive economic zone and continental shelf, are the exclusive property of the State and are therefore public domain goods (Article 1). Thus, the State is the holder of all hydrocarbon exploitation rights in Equatorial Guinea and has the right to perform petroleum operations through its national companies or an association with a contractor.

Under the law, all contractor's activities shall be authorised and regulated by the Ministry of Mines and Hydrocarbons. This Ministry is responsible for negotiating, signing and executing all contracts between the State and contractors, including any amendment thereof, to ensure that petroleum operations are carried out for the benefit of the State.

Article 5 provides that all petroleum operations are to be conducted in a prudent manner using the best technical and scientific practices available in the petroleum industry and taking into account the safety of persons and facilities, as well as the protection and sanitation of the environment and the conservation of natural resources.

Chapter III empowers the Ministry of Mines and Hydrocarbons as the State entity responsible for the formulation, regulation and monitoring of petroleum policies, as well as the administration, planning, implementation, supervision, inspection, auditing and enforcement of all oil and gas developments and all activities relating thereto.

Chapter XIV provides for environmental protection and sanitation, health and safety. It mandates contractors and their associates to take all precautions necessary to protect and preserve the environment in the course of conducting petroleum operations.

Chapter XVI, on natural gas, states that all associated natural gas that is produced and not utilised in petroleum operations is the property of the State. Further, it strictly prohibits the flaring of any quantity of natural gas. The Ministry may authorise flaring of minimum quantities of gas if so requested in a pertaining report including technical, economic, financial or environmental reasons for flaring, which, in the opinion of the contractor, unavoidably results in the need for flaring. In this case, the Ministry shall have sole discretion to authorise flaring, with or without requesting compensation by the contractor and/or its associates.

The Hydrocarbons legislation also outlines applicable royalties, taxes, penalties and sanctions.

3.2 How are the State's mineral rights to develop oil and natural gas reserves transferred to investors or companies (“participants”) (e.g., licence, concession, service contract, contractual rights under Production Sharing Agreement?) and what is the legal status of those rights or interests under domestic law?

Under the Hydrocarbons Law, the right to undertake petroleum operations are granted to investors or contractors through a Product Sharing Contract (PSC), which shall only be entered into after an international public tender or direct negotiation. The PSC shall only become effective after ratification by the President and confirmation of the ratification to the contractor.

The PSC grants a contractor the right to undertake petroleum operations, which is divided into a) exploration, and b) production of oil and gas, in Equatorial Guinea.

In addition, Mining Law (Law No. 1/2019, of November 20, 2019), and the Ministry of Mines and Hydrocarbons may grant mining rights to third parties by means of concessions, licences, authorisations (“Mining Rights”) and, where appropriate, contracts in favour of natural or legal persons interested in engaging in mining activities and operations of research, prospecting, exploration, and exploitation of mineral and geological resources. That means, as a rule, the mining rights are non-transferable, i.e., only the person who holds the mining right has the right to exploit it. Exceptionally, a transfer of mining rights may occur subject to obtaining the prior written consent of the Ministry of Mines and Hydrocarbons.

3.3 If different authorisations are issued in respect of different stages of development (e.g., exploration appraisal or production arrangements), please specify those authorisations and briefly summarise the most important (standard) terms (such as term/duration, scope of rights, expenditure obligations).

Different authorisations may be granted based on different oil operations or stages. The law divides oil operations into two stages:

  1. the exploration period, which includes the exploration phase;
  2. the evaluation phase; and
  3. the production period, which includes the development phase and the production phase.

The exploration period is divided into an initial period of exploration divided into two sub-periods, the first and the second sub-period of exploration. The duration of the initial exploration period will be between four and five years, in accordance with the provisions of each contract a maximum of two extension periods of one year for each one.

Article 27 of the Law provides that the phases of exploration, evaluation, development, and production will be more precisely defined in each contract and Article 28 allows the parties to agree and set the obligations in the PSC, including the obligation to renounce one or several parts of the Contract Area.

The contractors and their associates may also request the temporary occupation or forced expropriation of the land where they conduct operations, as well as the constitution of easement in favour of the activity. Any temporary occupation, forced expropriation of land or easement will be carried out in accordance with applicable laws and existing rights and will be limited to the land or area necessary to carry out petroleum operations.

In practice, contractors will normally assume all costs, but can recover these against the State, deducting them on oil revenues.

3.4 To what extent, if any, does the State have an ownership interest, or seek to participate, in the development of oil and natural gas reserves (whether as a matter of law or policy)?

In accordance with Hydrocarbons Law and the New Petroleum Regulations, the State is entitled to invest or participate in any contract either directly or through the National Oil or Gas Company as determined by the Ministry. The State's investment or participation shall be by way of a carried or paid interest not less than 20%.

3.5 How does the State derive value from oil and natural gas development (e.g., royalty, share of production, taxes)?

Under the aforementioned Hydrocarbons Law, the State derives value from the development of its oil and gas resources through a) direct investment or participation interest in the contract of 20% or more, b) the royalties paid to the State corresponding to a minimum rate of 13% based on daily production (gross production), c) domestic consumption requirements, and d) the taxes levied on the sector as follows:

  1.  income taxes;
    1. corporate income tax (35%) + payment of minimum income tax (1.5%) (this is an advance of CIT);
    2. personal income tax; and
    3. income tax on the income of residents (6.25%) and non-residents (10%)(withholding tax).
  2. taxes on transfers and assignments that generated by capital gains not invested in Equatorial Guinea. (Transfer tax 3%);
  3. export duties;
  4. surface premiums or royalties; and
  5. discovery, production and marketing bonuses.

3.6 Are there any restrictions on the export of production?

Yes, there are some restrictions on the export of production. All exports are subject to authorisation by the government.

3.7 Are there any currency exchange restrictions, or restrictions on the transfer of funds derived from production out of the jurisdiction?

In accordance with Regulation No. 02/18/CEMAC/UMAC/CM of December 21, 2018, relating to extractive companies, these companies are obligated to repatriate foreign currency assets held outside the CEMAC as of January 1, 2022. To this end, the Central Bank announced the adoption by the end of December 2021 of a regulation that will govern the repatriation of foreign exchange held in accounts outside CEMAC by these companies.

From January 1, 2022, Extractive Companies will be required to repatriate at least 35% of the foreign exchange generated by their activities into onshore accounts. This is in line with the above regarding the preferential regime for Extractive Companies. Unlike the 2018 Regulation, which does not set a minimum repatriation rate and advocates for full repatriation of foreign exchange, the Draft Repatriation Regulations allow companies in the extractive sector to hold 65% of the foreign exchange generated from their operations in offshore accounts. This measure is intended to allow companies to continue to have access to external financing and to make payments to suppliers and contractors in real time.

The companies are required to repatriate these currencies within 150 days from the date of removal. The Central Bank has specified that for this measure, an evaluation phase of 10 months will be observed as from January 1, 2022, during which, infringements will be noted but no penalty will be imposed on companies for non-compliance within this period.

It is important to note that some companies are excluded from the scope of this measure. Companies in the exploration phase, which do not generate profits as such, and those whose contracts are backed by Reserves Based Landing (RBL) financing will not be required to repatriate the foreign exchange generated by their activities.

3.8 What restrictions (if any) apply to the transfer or disposal of oil and natural gas development rights or interests?

Under Article 102 of the Hydrocarbons Law No. 8/2006 and its approved Regulation No. 2/2020, dated June 15, 2020, on Petroleum Operations, the Ministry's prior written authorisation is required for any assignment, transfer or disposition of rights granted under a PSC. The Ministry's approval is only required for the transfer of more than 50% of the contractor's share under the PSC that affects the ownership of the rights in the contract. 

However, while the law provides that the approval requirement does not apply to the acquisition or merger of the Parent or Hold Co. of a contractor, the Ministry's approval will ultimately be required where this in some way, directly or indirectly, affects the contract or ownership of the asset.

In addition, the National Oil Company has pre-emptive rights over any interest under the contract (Article 168 Petroleum Regulations).

3.9 Are participants obliged to provide any security or guarantees in relation to oil and natural gas development?

Participants are obliged to provide security or guarantees in connection with granting of oil and natural gas development rights. Under Article 17 of Regulation No. 2/2020, dated June 15, 2020, on Petroleum Operations, each party shall provide to the State, at the sole discretion of the Ministry, a parent company guarantee or an irrevocable standby letter of credit otherwise the contract will be considered null and void.

3.10 Can rights to develop oil and natural gas reserves granted to a participant be pledged for security, or booked for accounting purposes under domestic law?

Participants may facilitate the booking of reserves and subject to the terms and conditions of the contract, such rights may be pledged for security purposes with the prior authorisation of the Ministry.

3.11 In addition to those rights/authorisations required to explore for and produce oil and natural gas, what other principal Government authorisations are required to develop oil and natural gas reserves (e.g., environmental, occupational health and safety) and from whom are these authorisations to be obtained?

The environmental guidelines of the hydrocarbons sector are governed by the Law, the Regulations and the Environmental Law. Generally, all industry participants are required to carry out their activities in a manner that considers and implements all necessary precautions to protect the environment.

Contractors and licence holders are required to submit plans for approval, in accordance with the Environmental Law, specifying the practical measures that should be taken in order to prevent harm to the environment, including environmental impact assessment studies and audits, plans for ecosystems and structural rehabilitation and permanent management and environmental auditing plans.

The environmental impact analysis studies must detail the general description of the project and expected demands of time, the relationship and the use of soils and other natural resources. The plan must include estimations of the types and quantity of waste discharge and emissions, evaluation of predicted direct and indirect effects on the population, wildlife, plants, soil, water, climate, landscapes and air. It must also include measures planned to reduce, eliminate and offset the significant negative environmental effects. 

In the case of a violation, a contractor will be subject to a fine in an amount to be determined by the environmental monitoring authorities.

Furthermore, an occupational health and safety plan must be implemented in compliance with the local legislation (Law No. 4/2021 of December 3, 2011 on Labor regulations and Law No. 14 dated November 12, 1984 on the Labour Inspection). The State designs and progressively implements the national policy on occupational safety and health and the improvement of the working environment and working conditions, promoting concrete improvement measures and compliance with legislation. It also establishes a procedure for investigating occupational accidents and compiles statistics on occupational accidents and work-related illnesses.

3.12 Is there any legislation or framework relating to the abandonment or decommissioning of physical structures used in oil and natural gas development? If so, what are the principal features/requirements of the legislation?

Participants must prepare and deliver to the Ministry a plan for the abandonment of all wells, facilities and equipment, the rehabilitation of the landscape and the continuation of petroleum operations, if applicable, upon the earlier of i) six years prior to the estimated commencement of abandonment operations, ii) the date on which 50% or more of the recoverable hydrocarbons from a Development and Production area have been produced, and iii) one year prior to the termination of the applicable contract or the proposed date of the abandonment of any production area included therein.

This plan shall be subject to the prior approval of the Ministry and may be amended by the participant and the State from time to time to take account of further petroleum operations.

Further, participants must establish and contribute to reserve funds to provide for all future abandonment costs. This reserve fund must take the form of an escrow account opened in the name of the participants and the State with an international financial institution acceptable to them. The amount to be deposited by the participant, as well as the timing of such deposits, shall be established in the abandonment plan approved by the Ministry.

3.13 Is there any legislation or framework relating to gas storage? If so, what are the principal features/requirements of the legislation?

The right to store all refined products is reserved for the State. Any activities related to the storage of hydrocarbons is regulated by Petroleum Regulations.

No person may store any quantity of hydrocarbons or products without a contract or a licence that permits that person to store that quantity of hydrocarbons or products. An authorisation shall be required from the Ministry in order to obtain the corresponding permit to perform such activities.

A contractor or a licensee may store in accordance with the following requirements:

  1. the quantities of hydrocarbons or products expressly permitted by the contract or licence; or 
  2. such reasonable quantities of hydrocarbons or products the storage of which is necessarily incidental to the activities permitted by the contract or licence.

Premises used for the storage of hydrocarbons or products must be: 

  1. suitable for the volume and type of hydrocarbons or products that are stored there;
  2. situated at a sufficient distance from residential or industrial areas to avoid death, injury or property damage in the event of a fire, explosion or accident;
  3. secured so that no unauthorised persons have access to those parts of the premises that constitute a risk or hazard;
  4. properly supplied with protective equipment for authorised personnel and with suitable extinguishers and fire-fighting equipment; and
  5. designated as no-smoking areas and strictly enforced as such.

3.14 Are there any laws or regulations that deal specifically with the exploration and production of unconventional oil and gas resources? If so, what are their key features?

There are no special laws regulating non-conventional resources such as coalbed methane, gas hydrates or shale gas. All conventional and unconventional resources are subject to the general hydrocarbons law and its regulations.

3.15 What has been the impact, if any, of the “energy transition” on the oil and gas industry in your jurisdiction, and are there any policies or laws/regulations that require the oil and gas industry to decarbonise? Are there any policies or laws/regulations relating to the development of low-carbon hydrogen and its use in conjunction with or in place of natural gas, or the development of carbon capture and storage?

Africa's oil and gas industry is entering a new era. As the world looks to accelerate its transition away from fossil fuels, the pressures on the continent's oil and gas producing nations are mounting. Energy demand on the continent threatens to outstrip supply. African energy demand in 2040 could be around 30% higher than it is today, compared with a 10% increase in global energy demand.

Some believe that if oil and gas producing countries in Africa consider steps to create enabling environments, improve access to available capital pools, and attract the right skills and capabilities, they could both meet the energy needs of their developing populations and position themselves strongly in a new energy landscape.

However, Equatorial Guinea is among several emerging oil-producing nations that have shown reluctance to embrace the global energy transition trend as is without taking in consideration an African perspective. Despite occupying a continent rich with abundant natural oil and gas resources, African countries continue to struggle with an energy crisis. There are an estimated 600 million people across Africa living without access to electricity. The Equatorial Guinea government has strongly expressed its position that while green energy holds great promise for the world as it continues to improve our technology and form more sustainable practices, every country cannot be expected to approach energy transition in the exact same manner.

Energy poverty is one of the continent's biggest impediments to inclusive economic growth. As a catalyst for industrialisation, economic growth, and greater stability for Africa, the exploitation of fossil fuels is still necessary to expand the continent's wealth and energy security.

Natural gas is a crucial fuel choice for any decarbonisation pathway for Equatorial Guinea, and the continent, as it aids in achieving energy independence and environmental sustainability in pursuit of global climate goals.

Natural gas can be monetised to generate revenue while serving as a feedstock for chemical and fertiliser manufacturing, creating even more opportunity and revenue. Therefore, the Minister of Mines and Hydrocarbons has expressed that while gas-to-power projects could make a tremendous difference in Africa, gas-fired power plants can only be built and sustained when oil and gas revenues are strong.

In this sense, Equatorial Guinea's energy policies differs from the energy transition targets set by most countries because it considers that it is essential for African countries to develop their own transition by prioritising oil and natural gas revenues in order to achieve socio-economic growth, maximise gas-to-electricity projects, and develop a more efficient use of energy resources. Likewise, intercontinental collaboration can allow the continent to fully capitalise on the jobs and economic prospects associated with resource development and thus lead to a just and equitable energy transition.

4. Import / Export of Natural Gas (including LNG)

4.1 Outline any regulatory requirements, or specific terms, limitations or rules applying in respect of cross-border sales or deliveries of natural gas (including LNG).

Under Article 43 of the Hydrocarbons Law, all persons wishing to perform hydrocarbon refining and commercialisation (sales) activities must obtain a licence from the Ministry, which shall contain the following minimum requirements:

  1. identification of the persons and their representatives;
  2. description of the project indicating the applicable technology and the destination of the products, as well as the economic resources to be employed in the project;
  3. duration of the applicable company or project, which shall not exceed 25 years, renewable for a term to be agreed on, which shall not exceed 10 years, provided that the project requirements have been complied with; and
  4. an indication of the special advantages offered to the State.

Likewise, all participants engaged in the refining and commercialisation activities must register at the Ministry of Mines and Hydrocarbons.

5. Import / Export of Oil

5.1 Outline any regulatory requirements, or specific terms, limitations or rules applying in respect of cross-border sales or deliveries of oil and oil products.

There are no special regulatory requirements that apply to the cross-border import and export of oil and/or oil products, other than the requirement to obtain a licence, and the payment of any applicable custom duties and taxes.

6. Transportation

6.1 Outline broadly the ownership, organisational and regulatory framework in relation to transportation pipelines and associated infrastructure (such as natural gas processing and storage facilities).

The construction and operation of transportation pipelines and associated infrastructure is governed by the Hydrocarbons Law and New Petroleum Operation Regulations.

Under Article 45 of the Hydrocarbons Law, the construction and operating of pipelines and transmissions through piping relating to petroleum operations may only be undertaken by the State or a national company, unless otherwise stated by the Ministry. Hence, the Ministry may authorise the laying of pipelines, gas transmission lines, facilities and other equipment through another Contract Area, provided that this does not unreasonably hinder petroleum operations of the latter and only after consulting with the relevant contractor.

For the regulatory framework relating to the gas storage facilities please see question 3.13.

The Alen gas monetisation project is part of Equatorial Guinea's plans to create a “gas mega hub”, which seeks to utilise existing infrastructure to build a gas energy industry within Equatorial Guinea and to develop the first successful cross-border gas venture on the African continent. Equatorial Guinea launched Africa's first offshore gas mega hub in 2019, signing agreements with Marathon Oil, Noble Energy, Atlas Petroleum, Glencore and Gunvor to process stranded gas from the Alen and Aseng gas fields. The move aims to offset production declines at the country's Alba field and to tap stranded gas reserves along maritime borders with Cameroon and Nigeria.

The Alen gas project facilitates the transport of gas from offshore production infrastructure to existing onshore facilities at Punta Europa (the Alba Plant and the Equatorial Guinea LNG Plant), where it will be processed and converted into LNG, allowing for future discovered resources to be processed in the country and supporting the further development of downstream gas industries to spur industrial development and economic growth.

Infrastructure for the project, led by Noble Energy, which was acquired by Chevron in late 2020, consists of a 70 km pipeline with a capacity of 950 million cubic feet of natural gas equivalent per day. The pipeline allows gas from the Alen field, located in the Douala Basin offshore Equatorial Guinea, to be processed through existing onshore facilities in Equatorial Guinea.

6.2 What governmental authorisations (including any applicable environmental authorisations) are required to construct and operate oil and natural gas transportation pipelines and associated infrastructure?

The construction and operation of transportation pipelines and associated infrastructure must be carried out in accordance with the term of the applicable production licence.

In this sense, pursuant to the Hydrocarbons Law and New Petroleum Operation Regulations, the applicable production license prohibits licensees from installing any permanent structure or carrying out any work for the purpose extractive hydrocarbons without the authorisation of the Ministry or without having a development and production programme that the Ministry has approved.

See question 3.11 relating to the regulatory framework for environmental authorisations.

6.3 In general, how does an entity obtain the necessary land (or other) rights to construct oil and natural gas transportation pipelines or associated infrastructure? Do Government authorities have any powers of compulsory acquisition to facilitate land access?

In relation to the transportation pipeline and associated infrastructure, the Ministry has power to authorise the necessary land rights under the Hydrocarbons Law and New Petroleum Operation Regulations. Note that consent of the State is mandatory to construct such infrastructures.

6.4 How is access to oil and natural gas transportation pipelines and associated infrastructure organised?

The Ministry may determine that in a Contract Area, the facilities and other equipment of another Contract Area may be used, if such use contributes to more efficient and economic management of existing resources and provided that this does not materially reduce production levels or disrupt the satisfactory progress of petroleum operations in the Contract Area to which such facilities and equipment were originally allocated.

Any decision taken by the Ministry shall be taken after consultation with the contractor in each of the Contract Areas involved.

The amount to be paid for use of the facilities and equipment referred above shall be agreed by the contractors, and shall be submitted to the Ministry for its approval. If no such agreement is reached within a period of time that the Ministry deems adequate, the Ministry shall set the price for such use.

6.5 To what degree are oil and natural gas transportation pipelines integrated or interconnected, and how is co-operation between different transportation systems established and regulated?

As transportation pipelines are generally privately owned in Equatorial Guinea, any licensee who wishes to connect new pipelines or interconnect existing pipeline systems will need to negotiate contractual arrangements with the existing pipeline owners.

6.6 Outline any third-party access regime/rights in respect of oil and natural gas transportation and associated infrastructure. For example, can the regulator or a new customer wishing to transport oil or natural gas compel or require the operator/owner of an oil or natural gas transportation pipeline or associated infrastructure to grant capacity or expand its facilities in order to accommodate the new customer? If so, how are the costs (including costs of interconnection, capacity reservation or facility expansions) allocated?

Please see question 6.4.

6.7 Are parties free to agree the terms upon which oil or natural gas is to be transported or are the terms (including costs/tariffs which may be charged) regulated?

Parties are free to agree the terms upon which oil or natural gas is to be transported.

7. Gas Transmission / Distribution

7.1 Outline broadly the ownership, organisational and regulatory framework in relation to the natural gas transmission/distribution network.

The regulatory framework is founded on a licensing system that provides that certain key activities cannot be undertaken without a licence or an exemption. That means that the right to store, transport and otherwise distribute all refined products is reserved for the State. Any activities related to the storage, transportation and other distribution of hydrocarbons is regulated by Petroleum Regulations. An authorisation shall be required from the Ministry in order to obtain the corresponding permit to perform such activities.

The distribution and sale of natural gas in the domestic market of Equatorial Guinea is the sole and exclusive responsibility of the National Gas Company, which may operate in partnership with other persons, giving preference to the contractor that discovered the natural gas.

With regard to natural gas transmission and distribution, one of the government's recent initiatives has focused on collaborating with Nigeria. As discussed above, Nigeria signed an MOU with Equatorial Guinea on February 23, 2022, under which Nigeria will supply gas from offshore fields to Punta Europa, Equatorial Guinea's Gas Processing Plant. The MOU will enable Nigeria to monetise its 200 trillion cubic feet of natural gas resources and correspondingly, provide a viable supply of gas for Equatorial Guinea's Gas Mega Hub project – designed to commercialise both domestic and regional gas resources while positioning Equatorial Guinea as a regional hub. It is expected that new natural gas distribution facilities will be constructed in implementing the purpose of this MOU.

7.2 What governmental authorisations (including any applicable environmental authorisations) are required to operate a distribution network?

The New Petroleum Operation Regulations state that no person may construct or operate a gas distribution facility without the corresponding licence.

Furthermore, environmental authorisations and licences are required in accordance with the Hydrocarbons Law and the above-mentioned regulation.

7.3 How is access to the natural gas distribution network organised?

The Hydrocarbons Law and Petroleum Operation provide that the Ministry may impose licensing conditions in respect of third-party access for uncommitted capacity in transmission pipelines and storage facilities but does not have specific access licensing conditions requirements in respect of distribution.

7.4 Can the regulator require a distributor to grant capacity or expand its system in order to accommodate new customers?

Yes, the regulator can require a distributor to grant capacity or expand its system in order to accommodate new customers.

7.5 What fees are charged for accessing the distribution network, and are these fees regulated?

Fees required to access the distribution network are regulated by commercial contracts. However, according to the Hydrocarbons Law and Petroleum Operation Regulations, the Ministry may impose licensing conditions regarding the maximum prices for distributors.

7.6 Are there any restrictions or limitations in relation to acquiring an interest in a gas utility, or the transfer of assets forming part of the distribution network (whether directly or indirectly)?

Please see question 7.1 above.

8. Natural Gas Trading

8.1 Outline broadly the ownership, organisational and regulatory framework in relation to natural gas trading. Please include details of current major initiatives or policies of the Government or regulator (if any) relating to natural gas trading.

The Ministry may establish technical standards applicable to commercialisation activities.

The premises and facilities used for commercialisation activities must be:

  1. suitable for the commercialisation activities carried out there;
  2. secured so that no unauthorised persons have access to those parts of the premises that constitute a risk or hazard;
  3. properly supplied with protective equipment for authorised personnel and with suitable extinguishers and fire-fighting equipment; and
  4. designated as no-smoking areas and strictly enforced as such.

Where commercialisation activities involve the packaging or repackaging of products into containers, the licensee shall ensure that the containers are:

  1. suitable for the type of products contained in them; and
  2. clearly labelled to identify the quantity and type of products contained in them.

Where the licensee is in possession of containers that have been used to contain products, the licensee shall ensure that those containers are properly disposed of or recycled. If those containers are disposed of for reuse by any other person, the licensee shall ensure that prior to disposal:

  1. the containers are cleaned so as to remove all residues of the products contained in them; and
  2. all labels indicating the previous contents of the containers are removed from them.

8.2 What range of natural gas commodities can be traded? For example, can only “bundled” products (i.e., the natural gas commodity and the distribution thereof) be traded?

There is no obligation to trade only bundled commodities.

9. Liquefied Natural Gas

9.1 Outline broadly the ownership, organisational and regulatory framework in relation to LNG facilities.

Under Article 109 of the New Petroleum Operation Regulations, the contractor shall build and maintain all facilities necessary for the proper performance of the contract and the conduct of Exploration and Production Operations thereunder.

In order to occupy land necessary for the exercise of its rights and obligations under the contract, the contractor shall request the authorisation of the Ministry and/or other applicable governmental authorities, of which authorisations shall be subject to the Hydrocarbons Law and other applicable laws of Equatorial Guinea. The contractor shall repair any and all damage caused by such circumstances.

The principal legislations governing the LNG facilities are as follows:

  • Hydrocarbons Law No. 8/2006 November 3, 2006.
  • Ministerial Order 1/2014 relating to National Content in the oil and gas sector.
  • Ministerial Order 1/2018 May 14, 2018, which regularises the registration and authorisations of companies in the sector.
  • Regulation No. 2/2020 June 15, 2020 on Petroleum Operations.

Other legislation, regulations and/or agencies that can apply to the construction and operation of an LNG facility in Equatorial Guinea include:

  • Law No. 4/2021 dated December 3, 2021 on Labor Regulations.
  • Decree 72/2018, which revises Decree 127/2004 and provides additional rules intended to foment and guarantee foreign investment.

9.2 What governmental authorisations are required to construct and operate LNG facilities?

It should be noted that generally the following licence requirements are applicable in a LNG project:

Transportation by pipeline

  • Licence for the construction of a transmission pipeline.
  • Licence for the operation of the transmission pipeline.

Storage

  • Licence required for the construction of a land-based LNG storage facility.
  • Licence required for the construction of a land-based LNG storage facility.

Regasification

  • Licence required for the construction of a land-based LNG regasification facility.
  • Licence required for the construction of a land-based LNG regasification facility.

Marine and Marine Foreshore Authorisations

  • This generally applies to the construction of a near shore floating LNG facility, or a LNG facility on land.

Small-scale LNG operations

  • Licence required for the construction of a small-scale facility.
  • Licence required for the operation of a storage facility.
  • Licence required for the operation of a regasification facility.

In addition, various environmental licences and authorisations will be required in accordance with the relevant legislations.

9.3 Is there any regulation of the price or terms of service in the LNG sector?

Under Article 152 of the New Petroleum Operation Regulations, the selling price for all natural gas sold in the domestic market shall be set by the Ministry. 

The selling price for all natural gas sold outside the domestic market shall be as agreed between the Ministry and the contractor.

The Ministry and the contractor shall proceed in good faith to negotiate a gas sales agreement, if required, and all such other agreements and arrangements between themselves or involving third parties as may be necessary to enable the production, sale and marketing of natural gas.

No project for the production, sale and marketing of natural gas shall commence until the Ministry and the contractor have concluded the agreements and arrangements referred to above, which shall include the payment by the contractor to the Ministry of a Royalty in accordance with Article 59 of the Hydrocarbons Law.

9.4 Outline any third-party access regime/rights in respect of LNG facilities.

Please see question 7.3 above.

10. Downstream Oil

10.1 Outline broadly the regulatory framework in relation to the downstream oil sector.

Equatorial Guinea currently does not have refining capacity; however, the government is taking commercial steps to set up refineries in the country to reduce its dependence on imports of refined crude oil.

The downstream industry in the country is much smaller in comparison to the upstream and midstream sector. The downstream industry in the country is at a nascent stage. As new investment is expected to flow into the refining sector, it is likely that the downstream industry will experience substantial growth.

In order to implement the downstream oil sector, the New Petroleum Operation Regulations No. 2/2020, dated June 15, 2020, now includes the Petrochemical Operations, which were not defined in the previous Regulation. There is a mandatory requirement to obtain a licence from the Ministry of Mines and Hydrocarbons before commencing any petrochemical operations. In relation to the refining, petrochemical and marketing activities, the Ministry may now directly carry out refining, petrochemical and marketing activities, i.e., mid- and downstream activities, in association with private companies or through national companies – GEPetrol or SONAGAS.

Equatorial Guinea's Ministry of Mines and Hydrocarbons and the DRC's Ministry of Hydrocarbons signed an MOU at the Angola Oil & Gas (AOG) 2022 Conference & Exhibition, to develop existing synergies across their respective upstream, downstream, energy infrastructure and logistics sectors. The agreement provides for the establishment of a working group to achieve shared energy objectives and the implementation of specific projects. These include the financing and construction of an oil refinery in the DRC – to be jointly owned by both countries – to meet regional demand for refined petroleum products, along with the construction of storage facilities for refined products.

10.2 Outline broadly the ownership, organisation and regulatory framework in relation to oil trading.

Please see question 8.1.

11. Competition

11.1 Which governmental authority or authorities are responsible for the regulation of competition aspects, or anti-competitive practices, in the oil and natural gas sector?

Equatorial Guinea does not have a national competition legislation or a competition regulatory authority. Thus, it applies a combination of trade policy, the main objective of which is to reduce government-imposed barriers to international trade, and competition policy, which mainly addresses anti-competitive business practices that impede the efficient functioning of markets.

Nonetheless, it is obligated to comply with the CEMAC competition law, which form the primary competition legislation. As a regional organisation, CEMAC's main objective is to develop a common market by encouraging and facilitating trade amongst its six Member States, namely Cameroon, the Central African Republic, Chad, the DRC Equatorial Guinea and Gabon. Together these Member States form an economic and monetary union. 

The CEMAC competition law, Regulation No. 06/19-UEAC-639-CM-33 of April 7, 2019 (Regulations), replaced the former 1999 regulations, and recognises the need to define common rules on competition, with the objective of promoting free competition and controlling or eliminating anti-competitive practices that have the object or effect of prejudicing trade within CEMAC, as well as the development of CEMAC and the welfare of consumers. It applies to all activities of production, distribution and service provision, regardless of whether they are performed continuously or intermittently, in the private or public sectors, or by companies or individuals. It also extends to anti-competitive conduct by businesses outside the CEMAC area that could distort competition within it.

Also, Article 99 of the New Petroleum Operation Regulations prohibits the participation in any agreement that has an objective, or the effect, of preventing, restricting or distorting the competition of the products in any market in Equatorial Guinea.

11.2 To what criteria does the regulator have regard in determining whether conduct is anti-competitive?

Based on Regulation No. 06/19-UEAC-639-CM-33 of April 7, 2019 as far as anti-competitive practices are concerned, the regulation prohibits any express or tacit agreements or collusion whose purpose or effect is to prevent, restrict or distort free competition within the CEMAC area. As examples of such practices, the regulation cites the following:

  1. limiting competition or market access for competitors;
  2. obstructing free price setting through artificial price hikes or dips;
  3. restricting or controlling production, markets, investments and technical development and progress;
  4. concerted refusals to deal;
  5. sharing markets or sources of supply; and
  6. collusive bidding.

On the other hand, under Article 99 of the New Petroleum Operation Regulations, prohibited agreements include agreements or understandings that:

  1. set the selling or purchasing price of related products and services;
  2. limit or restrict the production or supply of products;
  3. share or divide markets or sources of supply; and
  4. discriminate among clients.

Another practice outlawed by the regulation is the abuse of a dominant position. The regulation lists the following as examples of such conduct:

  • imposing unfair pricing or trading conditions;
  • limiting innovation, production, markets or technical development to the detriment of consumers;
  • applying dissimilar conditions to equivalent services, thereby putting the suppliers of certain services at a competitive disadvantage;
  • making the conclusion of contracts subject to the acceptance of unrelated additional services;
  • refusing the sale of products or services;
  • preventing another business from accessing the market;
  • severing commercial relations simply because the other party refuses to accept unjustified commercial terms;
  • imposing limitations on the resale or exportation of the products supplied; and
  • setting prices abnormally high or low in order to block market access for a particular business or product.

Under Article 100 of the Petroleum Regulations, the abuse of a dominant position shall include, without limitation:

  1. charging excessive prices;
  2. limitation or restriction of the production or product supply;
  3. refusing to provide new or existing clients without a good reason;
  4. charging different prices to different client for the same product; and
  5. making a contract conditioned to factors that are not related to the matter of the contract.

11.3 What power or authority does the regulator have to preclude or take action in relation to anti-competitive practices?

The CEMAC regulation gives the Community competition authorities wide-ranging powers to ensure that businesses comply with its provisions. Matters of policy come within the competence of the CEMAC Commission, while technical matters fall within that of the newly created Community Competition Council (CCC). The CCC has both consultative and investigatory powers. It may issue opinions of its own accord or at the request of Community bodies, governments and parliaments of CEMAC Member States, and Community-wide professional and consumer organisations. It also examines all anti-competitive practices referred to by the Commission, national competition authorities, or any professional and consumer organisations or businesses affected by such practices, as well as any mergers and concentrations that have an impact on the Community.

In addition to the above, under Article 101 of the New Petroleum Operation Regulations, the Ministry has the Power to investigate and proceed against any infringement or suspicion of an infringement of the anti-competition provision.

11.4 Does the regulator (or any other Government authority) have the power to approve/disapprove mergers or other changes in control over businesses in the oil and natural gas sector, or proposed acquisitions of development assets, transportation or associated infrastructure or distribution assets? If so, what criteria and procedures are applied? How long does it typically take to obtain a decision approving or disapproving the transaction?

Mergers and concentrations between companies will be considered to have an impact at Community level, and therefore fall under the exclusive competence of the Community, when the combined turnover of the parties involved within the CEMAC common market exceeds 10 billion CFA francs or, together, the parties hold more than 30% of the market. Community authorities will also be competent if the Member State in which the merger or concentration occurs does not have a competition authority or if the operation is likely to have an impact in more than one CEMAC Member State. Mergers and concentrations will be deemed unacceptable if they significantly reduce competition and thereby restrict choices for market participants or limit access to markets and sources of supply.

Under Equatorial Guinea's Hydrocarbons Law, the transfer of ownership of more than 50% of the shares of any party comprising the contractor (other than the national company) or any similar transfer that results in a change of Control shall be deemed to be an assignment of contractual rights under the contract and shall require the Minister's prior written approval.

Any change shall be notified in writing to the Ministry, who, within three months of receipt of the notification, shall issue a written acceptance or denial of the change, or, if applicable, make recommendations.

This transfer or disposition is subject to the payment of a non-recoverable and non-deductible fee.

12. Foreign Investment and International Obligations

12.1 Are there any special requirements or limitations on acquisitions of interests in the natural gas sector (whether development, transportation or associated infrastructure, distribution or other) by foreign companies?

Foreign companies may acquire interest in the Equatorial Guinea oil and gas sector subject to certain requirements including the following:

  • In accordance with Ministerial Order 1/2018 dated May 14, which regularises the registration and authorisations of companies performing activities in the mine and hydrocarbon sector in EG, all companies that carry out activities in the hydrocarbon sector are required to register at the Ministry of Mines and Hydrocarbons.
  • Foreign company contractors must register a local company or a branch in Equatorial Guinea.
  • Local participation and other local content requirements delineated under the local content regulations.

12.2 To what extent is regulatory policy in respect of the oil and natural gas sector influenced or affected by international treaties or other multinational arrangements?

All the relevant laws and regulations in Equatorial Guinea relating to oil and natural gas are drafted in compliance with best practice and take applicable international standards and local perspectives into consideration.

13. Dispute Resolution

13.1 Provide a brief overview of compulsory dispute resolution procedures (statutory or otherwise) applying to the oil and natural gas sector (if any), including procedures applying in the context of disputes between the applicable Government authority/regulator and: participants in relation to oil and natural gas development; transportation pipeline and associated infrastructure owners or users in relation to the transportation, processing or storage of natural gas; downstream oil infrastructure owners or users; and distribution network owners or users in relation to the distribution/transmission of natural gas.

In the context of the licensing regimen under the Hydrocarbons Law, if a dispute, claim, conflict or controversy relating to the licence arises between the Ministry and the licensee or downstream gas market, the dispute is required to be referred to arbitration unless the licence expressly provides that the matter under dispute is to be determined, decided, directed, approved and consented by the Ministry.

The arbitral tribunal will be constituted by three arbitrators selected according to the following procedure:

  1. The claimant and respondent will each designate one arbitrator within 30 days of the date on which the request for arbitration was submitted. If there is more than one claimant or more than one respondent, then the claimants and/or the respondents collectively will each appoint a single arbitrator by giving notice in writing of this designation to the other party or parties to the dispute and ICC.
  2. If either the claimant or the respondent fails to comply with the time limit in the preceding paragraph, ICC will appoint the arbitrator or arbitrators that have not yet been appointed, at the request of either the claimant or the respondent and after consulting the claimant and the respondent so far as possible. ICC will give notice in writing of such designation or designations to the claimant and the respondent.
  3. The two arbitrators so designated will, within 30 days of their nomination, agree on the person to be named as the President of the tribunal, and give notice of the designation to the claimant and the respondent, and ICC.
  4. If the two arbitrators fail to agree on the person of the President of the tribunal, ICC will name the President, at the request of either the claimant or the respondent, and after consulting the claimant and the respondent as much as possible. ICC will give notice in writing of the nomination to the claimant and the respondent.

None of the arbitrators will be a citizen of the countries of origin of any of the parties to the dispute (or in the case where the party is a company or another entity, any country or countries of nationality of the party, including the country of its ultimate parent).

13.2 Is your jurisdiction a signatory to, and has it duly ratified into domestic legislation: the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards; and/or the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID”)?

Equatorial Guinea is not a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards nor ICSID.

13.3 Is there any special difficulty (whether as a matter of law or practice) in litigating, or seeking to enforce judgments or awards, against Government authorities or State organs (including any immunity)?

In practice, there may be challenges in litigating or enforcing judgments or awards against the Government authorities. For one, Equatorial Guinea is not a signatory to the New York Convention and this is an important consideration in instituting any legal action against the Government outside the country. There is also the issue of lengthy litigation processes in the country.

13.4 Have there been instances in the oil and natural gas sector when foreign corporations have successfully obtained judgments or awards against Government authorities or State organs pursuant to litigation before domestic courts?

We are not aware of any instance where foreign corporations or organisations have obtained commercial judgments or awards against Equatorial Guinea government authorities in the oil and gas sector.

14. Updates

14.1 Have there been any new regulatory or policy initiatives in your jurisdiction directly in response to the recent rise in global oil and gas prices (such as price caps, subsidies or a new focus on local sources of energy)?

As we discussed above, cross-border cooperation is one of the key tenets of Equatorial Guinea's energy development strategy. The country has identified, and prioritised, the benefits of collaborating with other African countries in the oil and gas industry to maximise the continent potential against energy insecurity and price instability.

14.2 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in Oil and Gas Regulation Law in your jurisdiction (other than anything already discussed above).

The pandemic and low oil prices affected Equatorial guinea's oil and gas industry, causing a pause in, and even complete stoppage of, some operations in the last few years. Nonetheless, the industry is on a path to recovery and is laying the groundwork for new initiatives. For example, the development of local petrochemical and downstream industries. There has been an advancement in legislation to provide for these new industries.

The Minister of Equatorial Guinea's Ministry of Mines and Hydrocarbons is the current President of both OPEC and GECF for 2023 and continues to echo the country's strong gas message. There is also an increased need to secure financing for existing and new projects and we expect that there will be new PSCs executed within this period.

Another major development in Equatorial Guinea's oil and gas industry is the planned reconnection of the Zafiro oil platform in early 2023 and the departure of ExxonMobil as an oil producer in the country, after its licence ends in 2026, as it seeks to reduce crude production and focus on developing lower carbon assets. The Zafiro oil platform, a major producing asset in Equatorial Guinea, was shut down in September 2022, and there are plans underway to reopen the asset and increasing drilling.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.