Exxon Mobil Corp. is planning to quit Equatorial Guinea in the coming months, marking the end of nearly three decades of oil drilling that pushed the small West African nation to become an OPEC member.
According to Bloomberg, the corporation announced via email that it will transfer its investments in the country to the government during the second quarter. Equatorial Guinea emerged as a major oil hub at the turn of the twenty-first century, fueled by Mobil Corp. finds in the mid-1990s.
Following Exxon’s takeover of Mobil in 1999, production increased dramatically, but the coastal nation’s output fell by more than 80% over time as oil reservoirs dried up and foreign investment dwindled. CEO Darren Woods has reduced worldwide capital spending, shifting the focus to the most rapidly developing and cost-effective opportunities, particularly in Guyana and the US Permian Basin.
According to Ken Medlock, director of Rice University’s Center for Energy Studies at the Baker Institute in Houston, when oil corporations deliberate capital allocation, they examine operational risks, taking into account elements such as regulatory frameworks and local political stability.
Equatorial Guinea witnessed an oil boom that benefited the ruling elite, particularly President Teodoro Obiang Nguema Mbasogo, who came to power in 1979, built political ties with the United States, and helped the country to one of Africa’s highest per capita GDP levels. Despite decades of oil production, the country has some of the continent’s lowest social indicators and a terrible human rights record.
Exxon’s biggest asset in Equatorial Guinea is the Zafiro field, which produced more than a billion barrels over two decades. Exxon confirmed plans in 2022 to decommission the field’s platform, which had been shut down owing to a safety problem.
Prior to the shutdown, Exxon was extracting approximately 45,000 barrels per day from the field, which was a fraction of its overall daily production of 3.8 million barrels. Exxon Mobil’s leaving raises concerns about the future of foreign investment in Equatorial Guinea’s energy industry, as well as the possibility of increased government control over oil output.