Interview with Minister of Mines, Industry & Energy, Equatorial Guinea

August 11, 2015 | Interview with Regional Executives

Mr Gabriel Obiang Lima graduated with a degree in Economics from Alma College, Dallas, Texas. Between 1999 and 2003 he was Secretary of State for Mines and Hydrocarbons and has been Vice Minister of Mines, Industry and Energy since 2003. He is the President of the Committee for the Monitoring of Petroleum Operations and a member of the boards of SONAGAS (Compañía Nacional de Gas de Guinea Ecuatorial), GEPetrol (Guinea Ecuatorial de Petróleo) and SEGESA (National Electricity Company).

One of the great economic success stories of Africa, perhaps one that’s not widely known about, is Equatorial Guinea. It’s one of the smallest countries but, in fact, has got the highest GDP of any African nation and is the third largest oil producer.

It is a remarkable success story because in a sense, from limited resources Equatorial Guinea has created a very successful economy. You had a, if you like, a long-term plan, Horizon 2020, to get the economy self-sustaining beyond oil. How is that going?

Gabriel Obiang Lima: That’s going very good. Like everybody, the oil price, I would like it to be better than it is but I have to say that the main reason that we have been very successful is that we were the last one in the neighbourhood having oil. So our biggest advantage was that we saw what our neighbours did with oil so when we studied that industry, we were able to pick up the good ones, avoiding the bad. The other one is, we have been focusing on utilising, to the maximum, our resources. We’re not just thinking about crude oil, but thinking about utilising the gas and we have done very well. We have diversified our industry. Of course, with the current situation right now, we have adjustment. I used to be a minister that everybody liked because I was bringing oil. Right now nobody wants to talk with me. They’re very upset with me. They think it’s my fault, but clearly we have to keep going. We do believe that we have done very well in the exploration. We have been doing very good attracting companies. We have been very good regarding processing, even downstream. We have a methanol plant. We have an LNG plant. We have the oil production. Recently we had a PSC signed by ExxonMobil, signed and ratified. And clearly that’s a very important sign because if a company like ExxonMobil decide that they want to have a PSC in a country, it shows that they have prospects. Clearly, we need to continue. It is not just about producing oil. It’s about making sure that the population and everybody enjoy it. Now, we have been, clearly, because of our limitation of both our surface, but also population, we have been more efficient. It doesn’t mean that we are the best. We have been doing things, watching what the others have been doing, mainly Nigeria, Cameroon, Gabon, and that has been our secret. We haven’t done anything special. We have just been focused on making sure not to repeat the mistakes.

And also, you’ve changed your strategy in a way, in moving from oil very much more to gas. What’s the thinking behind that?

Gabriel Obiang Lima:  The thinking is that yes, oil is good but gas has a more direct impact to the population. For example, with the gas you can provide electricity. With the gas you can do ammonia urea in fertilizing, mixing it with phosphate. With the gas you can actually provide more electricity in the country. With the gas you can actually even transfer it. That’s what we’re doing to CNG, so you can just process and you produce that. So actually gas has a greater utilisation than oil in an Equatorial Guinea. The other reason is that the majority of the fields in Equatorial Guinea, in our region, are gas prone, so we have more reserves of gas than oil. And then we keep asking ourselves, how come the Asian countries like Korea, Japan, China, the rest, are using a lot of our gas and we ourselves, we don’t have the electricity, we don’t have the fertilizer, we are not using it in-country. So we focused, from the beginning, not to just focus on producing the oil, but to also have a plan of development that we can use the gas. With the gas we have built the biggest methanol plan in Africa. With the gas we have built the fastest built LNG plant in the world. With the gas we are actually building a CNG installation for buses, so we do believe that there is more benefit for the population using the gas. At the same time, we do believe that in the future, and this is what everybody is saying, gas is having a very prominent and important part than oil.

But you point out that you want to actually make sure that the gas is also being used in-country to develop the economy. So that means that although you want to export, you want to sell the gas, not at any price because you have got a deal with British Gas, which has been negotiated for some time. There seem to be a bit of a sticking point here because Shell is now coming on the scene and as I understand it, you don’t like what they’re doing. Why?

Gabriel Obiang Lima: The issue is the following, we do recognise that BG took a risk. BG was with us from day one with Marathon, Marubeni and Mitsui and the government…Shell is a very good company. It works in Nigeria. Of course we want to talk with them. We want to discuss exactly how they’re going to be working, solve those issues that we do believe are very serious matters that we cannot allow. But clearly there are a lot of sellers.

But at the same time, we want to be a good host. We want to make sure that the industry knows that Equatorial Guinea is a good place. And we have companies like ExxonMobil, Marathon Oil, so it’s not a sign to say that no, Equatorial Guinea’s is kicking the companies out. That’s not the case. But when we have sovereignty matters that can have a direct impact on the interest of the state, we do have to act on it. And that’s something that we’ll deal with Shell.

And the same thing that countries like China or the United States have, they have regulations that they need to do the process, we do also have regulations that we cannot allow that.

In the meantime, we do believe that Equatorial Guinea can utilise a lot of the gas. We are doing right now with the CNG. We want to take LNG to do power and we keep asking ourselves one question, how can countries like Korea, Japan, China, even Europe, are using a lot of the gas? They use it for electricity, they use it for buses. Africa needs a lot of electricity, how come we don’t use it?

And right now everybody is thinking about building a regasification plant. Senegal is thinking about it. Ghana is thinking about it. South Africa is thinking about it. Now we think, if Equatorial Guinea, a small country, we get our act together and we actually get a huge amount of gas, our gas but other gas, and build a regasification plant for power on the reserve from Equatorial Guinea, because of the geographical location, we can actually export electricity. And even in the future supply of CNG so it can be used in the regional neighbourhood.

And also what you’re doing, and I think it’s very clever, is not just exporting the gas and the oil, but it’s also exporting expertise. I think you, some time ago, said, “We want to be the Singapore of Africa.” In other words, you’re exporting expertise, support expertise, to surrounding countries. How is that going?

Gabriel Obiang Lima: That’s going very good. For example, we have a very good relationship with Mozambique. It’s a country that has a lot of gas discoveries. Mozambique is going through that process of evaluating what do they want to do.  Now, the key thing that we have been explaining and encouraging to a lot of the African countries is to understand that the money in the gas business, the LNG business, is not done in the selling of the LNG. It’s done on the boring of the gas, so what you want to do, you have to be going to the added value. It’s not the gas that you sell. You need to sell the electricity, the power plant that sells the gas, that’s the key thing and that’s the example that we have learnt from Trinidad and Tobago. We have a very good relationship with Trinidad when we started with the LNG and they advised us that it is very important that you understand that you can generate more revenue to the added value and this is through electricity than actually just selling the gas.

Yes. Of course, the strategy of a post-oil, post-gas, world seems to be doing very well. Just one final point, I know you’ve got elections next year. You’ve had your President in place for nearly 50 years. That’s a long time. He’s overseen considerable growth in the economy. People may be concerned that actually that’s rather a long time, is it that democratic? Is the government sufficiently transparent?

Gabriel Obiang Lima: I do believe so. We do believe so. We are very happy about the development. The biggest problem that a lot of people take is that they don’t evaluate where Equatorial Guinea was and where Equatorial Guinea is right now. The best example is Singapore. You have the Prime Minister, Lee Kuan Yew, who was from that stage in which Singapore have nothing and where is Singapore today. Now, the same thing happened with Equatorial Guinea. It has been 30 years. President Obiang is doing a very good job. Everybody in Africa, everybody, is realising the amazing job of development that that country, that was the poorest country in Africa, have gone to today, one of the key producers, one of the highest GDPs that you have seen in Africa.

The key thing that we have done is that recently, five years ago, we had a constitutional change. His Excellency decided that you cannot, we cannot, have a president for life. What we have to have is a president with terms, so he encouraged that we have two mandates.

He has already done his first mandate. He definitely is presenting for the next mandate and clearly through that mandate we will support him because we believe he has done a very good job. But definitely it will be his last mandate. That’s something that we do believe is very important.

We have gone through the process of evaluation because you have to remember, this has been a country that had nothing, a former colony with no universities, no doctors, nothing. So we needed to start from scratch the development of government.

Clearly, those checks and balances have been in the government to make sure that the government does this properly. Of course, in this current year the biggest issue that oil producing countries had was the drop of the oil. One of the things that we did immediately was to take measures, because when you have problems you need to cut measures. And those measures we took, probably Equatorial Guinea will be one of the first producing African countries, producing country, that actually we come out of this problem on liquidity because of the measures that we took immediately at the beginning of this year.

Interview conducted by Oil and Gas Council.