Equatorial+Guinea+Petroleum

=China National Offshore Oil Corporation (CNOOC) Likely to Increase Investments in Equatorial Guinea's Petroleum Sector=

Executive Summary:
CNOOC and other Chinese companies are likely to increase investments in exploration of Equatorial Guinea's petroleum sector. CNOOC already has been exploring offshore Block S in Equatorial Guinea and increasing the countries ties. Other Chinese companies, like China Petroleum and Chemical Corporation (Sinopec), have been creating good relations with Equatorial Guinea as well. Sinopec is in the running to aid Equatorial Guinea in the construction of a 20,000 barrels a day Mbini refinery and petrochemical complex and gain an ownership stake.

Discussion:
Equatorial Guinea is the eighth biggest crude oil reserve holder in Sub-Saharan Africa, with 1.1 billion barrels of proved reserves as of Jan. 2013. Most of the reserves are offshore near the Bioko island. Oil production averaged 318,000 barrels per day in 2012, below its peak of 369,000 barrels per day in 2007. Production originates entirely from offshore fields. Despite being among the top five largest oil producers in Sub-Saharan Africa, Equatorial Guinea does not have any refining capacity. The country consumed 2,500 barrels per day of petroleum in 2012, all of which was imported.

The government has announced plans to open a 20,000 barrels per day refinery in Mbini, but the project has been slow to develop. In 2012, Gabriel M. Obiang Lima, Equatorial Guinea's Minister of Mines, Industry and Energy, stated,"We are planning to build a refinery, but will only use a small amount (of crude) coming from our own production. We are having discussions with Sinopec regarding that…we were expecting to sign something today, but the time has gone too fast". The government has approached a number of global firms in regards to developing the refinery, but Lima said Sinopec would be the only company that would take an ownership stake in the project if chosen. Lima went on to explain to Dow Jones Newswires, that the 20,000 barrels a day refining and petrochemical complex in the country later could be expanded to 60,000 barrels a day.

CNOOC plans to drill two deep water wells of the coast of Equatorial Guinea by the end of 2013, with the aid of South Korea's SK Innovation Co.'s deep water drilling technology. CNOOC has drilled one well already, but discovered only non-commercial amounts of crude oil. In 2006, CNOOC signed an agreement with Equatorial to explore a 883 square mile Block S off the coast of the country. Lima stated, "We are inviting (CNOOC) to negotiate in another block, but they haven't concluded discussions with us".

** Analytic Confidence: **
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, worked alone while also collaborating with a group, and did not use a structured analytic method. The subject is moderately complex and the deadline was moderately easy to meet.
 * Analyst:** RoseAnna Wright