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Chevron’s entry into Equatorial Guinea, Cameroon, heats up scramble for investments in Africa

After acquiring Noble Energy for $13bn last month, American oil major Chevron charting a path into Central Africa through Equatorial Guinea’s oil and gas sector, where Noble Energy has interests in the three producing fields.

These assets in Equatorial Guinea represent 94 million barrels of oil equivalent of proved developed reserves and 38 million barrels of oil equivalent of proved undeveloped reserves.

In addition, Noble Energy was also the operator Block YoYo in Cameroon and of the deepwater Block Doujou Dak (60% WI) in Gabon, where it was in the process of evaluating recently acquired 3D seismic data.

The acquisition has raised several concerns and questions, mostly because these assets are currently subject the CEMAC region’s most ambitious gas development projects like the Alba Field which has been feeding gas into Equatorial Guinea’s Punta Europa complex for decades, including the EG LNG Plant, the AMPCO methanol plant and the Alba LPG plant, its declining reserves have led to the development of the Alen and Aseng fields as alternative sources of gas.

The African Energy Chamber believes that the entry of Chevron as operator for the offshore gas mega-hub could be transformational for the future of gas in Central Africa, especially at a time when Equatorial Guinea, Cameroon, Gabon, and Congo are all multiplying efforts to monetize their domestic gas reserves.

Chevron has become a huge gas player in the African market. In Nigeria, it has been leading natural gas commercialization efforts for decades through its Escravos projects targeting the monetization of 18Tcf of gas. These have resulted in the Escravos Gas-to-Liquids facility and the Escravos Gas Plant, both cornerstones of Nigeria’s gas development strategy. In Angola’s Block 0 and Block 14, Chevron has demonstrated a remarkable ability to invest in cutting flaring and monetizing gas. In block 0, it still operates what is the world’s largest LPG FPSO vessel, turning previously flared gas into cleaner fuels for Africans and for the world.

“What we need now is a pragmatic commonsense approach that welcomes credible investors and see gas taking the lead in economic development and industrialization, therefore the entry of Chevron is extremely welcomed and should be accepted by all stakeholders,” said NJ Ayuk, Executive Chairman at the African Energy Chamber.

According to Chevron, the acquisition of Noble Energy will add low-cost, proved reserves and attractive undeveloped resources to the oil major, further enhancing the company’s upstream portfolio.

The acquisition of Noble Energy provides a lesson for African countries like Nigeria about the importance of being a low-cost producer, removing impediments to investments such as insecurity, uncertain regulatory and fiscal frameworks.

“These assets play to Chevron’s operational strengths, and the transaction underscores our commitment to capital discipline,” said Michael Wirth, Chevron’s Chairman, and CEO.

While Nigeria is starved of investments, smaller African peers are attracting investments due to reforms that have improved ease of doing business.

Last year December, oIl majors including Chevron, decided to delay investments in different projects worth over $50billion on account of regulatory and security challenges, worsened by a slump in global oil prices.

“From its Nigerian and Angolan presence, Chevron understands the issues and opportunities of developing African content. We expect its entry to be beneficial from a local content and capacity building perspective,” said Leoncio Amada NZE, President for the Central African Economic and Monetary Community (CEMAC) region at the African Energy Chamber.

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