Equatorial Guinea Seeks $300 Million in Oil and Gas Prepayment Deals to Revive Declining Production
Equatorial Guinea, the smallest member of the Organization of the Petroleum Exporting Countries, has turned to commodity trading companies for prepayment deals on oil and liquefied natural gas to help finance a revival of domestic hydrocarbon production. The Central African nation is looking for $300 million in return for deliveries of crude oil and liquefied natural gas spread over multiple years, according to sources familiar with the matter.
The move represents the latest example of an African country seeking dollar financing from trading houses, which are keen to put sizable cash reserves to work following a stretch of record profits. For producing nations on the continent, this has become a way to fund their share of project developments or acquire assets as banks retreat from fossil fuels, while for traders, the incentive is access to barrels. Similar arrangements have been made across the continent, with Gunvor Group striking two deals in Gabon to help the country buy assets from Tullow Oil and Carlyle Group’s Assala Energy, while traders also formed the lender group behind a $3.3 billion facility raised by Nigeria to be repaid in oil cargoes. The government is looking for alternative funding to cover the costs of maintaining producing fields. Already the smallest OPEC member, Equatorial Guinea’s output declined to 40,000 barrels per day in November, roughly a third of its level four years earlier, as the country struggled to attract investment. Exxon Mobil Corp. left in 2024 after almost three decades, citing its long-term strategy, with state-owned GEPetrol taking over the main assets.
Despite the production challenges, Equatorial Guinea has maintained interest in the gas sector. An exporter of liquefied natural gas for nearly two decades, it counts companies including ConocoPhillips and a local unit of Chevron Corp. among participants in its gas operations. Common in commodity trading, prepayments provide upfront cash that is repaid with interest through commodity deliveries over time, with traders often refinancing part of the arrangement with banks. Equatorial Guinea in 2024 said it held talks with Trafigura Group about the possibility of $2 billion to support oil development, but no announcement of a deal followed. GEPetrol, Sonagas and the oil ministry did not respond to requests for comment.
Source: worldoil.com
