Gabriel Mbaga Obiang Lima is Equatorial Guinea’s Minister of Mines and Hydrocarbons. In this news interview with Africa 24, he discusses the role of the African Petroleum Producers Organization and other organizations on the continent in developing energy cooperation. He also mentions that it will be Equatorial Guinea’s turn to lead OPEC in 2023.
Haitham al-Ghais, Secretary General of the Organization of Petroleum Exporting Countries (OPEC), paid a visit to Equatorial Guinea. What was the purpose of this gathering?
The new Secretary General has made it clear from the beginning that he values the input of OPEC’s African members. It was also predicted that many African members would play pivotal roles during his presidency. Evidently, there are two primary motivations for his trip to Equatorial Guinea. For starters, we’re already OPEC members, and starting in 2023, our country will also hold the OPEC presidency. Aside from that, he saw our involvement in issues involving fossil fuels and crude oil as crucial coming from a member of the Organization of the Petroleum Exporting Countries (OPEC). It’s a great indicator of what’s to come in the new year, and it sends a message that membership in OPEC has nothing to do with a country’s size or its level of production. Furthermore, it shows that each member has an equal say in the organization’s decision-making process.
OPEC and its allies, including Russia (OPEC+), agreed at their last ministerial meeting on September 5 to cut global hydrocarbon production by 100,000 barrels per day in October to combat the drop in oil prices. Many countries, however, are concerned about the current prices of energy raw materials. Aren’t you working against the best interests of the greatest number?
The first thing you should know is that OPEC does not have price control. OPEC assesses both consumption and supply. What we actually do is monitor the quantity of market supply and demand; we do not control the price; if the price is high, it is not due to OPEC. It is linked to geopolitics, the Russia-Ukraine conflict, the withdrawal of ten million barrels from OPEC, and China’s economic slowdown. As a result, there are numerous factors that influence price fluctuations. OPEC’s sole function is to monitor the volume of crude supply versus the volume of demand. So it’s clear that OPEC isn’t the one raising prices artificially, as many people believe.
In 2017, Equatorial Guinea became a member of OPEC. Is there anything different about how your oil and gas industry operates now that you’re a member?
We’ve become more conscious of the significance of data. It is critical to monitor production and economic data, but it is also critical not to simply produce an asset or commodity and sell it at market value. You must understand how the market operates. Another factor that has aided us is the opportunity to collaborate with countries that have decades of experience in the gas industry.
As a result, they were able to advise us on certain things we were doing well, as well as others where we needed to improve. I believe the contribution they made to us was more important than anything else, and we should have joined OPEC much sooner, but as I previously stated, it is never too late. We joined OPEC and learned from it, but the most important factor is information and data. This includes not only crude oil supply or supply and demand data, but also international data on energy consumption around the world, as well as interaction with other organizations, all of which are necessary to comprehend how the market works.
Although it does not take part in setting oil prices, OPEC is worried about the plight of countries that produce oil but have no market for their product. Is there a system in place that assists producing nations in becoming self-sufficient?
People fail to understand that the price of oil is reflected in the prices they pay at the pump. It’s easy to assume that the high cost of gasoline is directly related to the high cost of crude oil, but this is not always the case. Many factors unrelated to cost are built into the price you see at the station. There are problems like where the supply comes from and artificial taxes imposed specifically for that purpose. The common belief is that if the price of oil goes up, so must the price of gas. One thing you have probably noticed is that when the price of oil rises, so do the prices at your station, but the opposite is true when the price of oil falls. When the price of oil drops, why doesn’t the price of gasoline and other goods follow suit?
Because governments also establish other parameters—such as taxes and special compensations—that are in some ways maintained by governments and that in some ways fluctuate. Countries like Saudi Arabia can afford to sell their gas at such low prices because they have abolished all gas taxes. Daily prices have nothing to do with the international price of crude, but in countries like Switzerland and Spain, they are very high because the government wants more taxes. That’s why gas prices stay the same even when the price of oil drops. Given that governments also establish other parameters—such as taxes and special compensations—that are in some ways maintained by the government and that in some ways fluctuate.
Countries like Saudi Arabia can offer such low gas prices because they have abolished all taxes on the commodity. Daily prices have nothing to do with the global price of crude oil, but in countries like Switzerland and Spain, they are extremely high because the government wants more taxes. this explains why the price of gasoline and other products does not decrease when the price of oil does. Because governments also establish other parameters—such as taxes and special compensations—that are in some ways maintained by governments and that in some ways fluctuate. Countries like Saudi Arabia can afford to sell their gas at such low prices because they have abolished all gas taxes. Daily prices have nothing to do with the international price of crude, but in countries like Switzerland and Spain, they are very high because the government wants more taxes. are, in a sense, regulated by the state and, in a sense, change over time.
Countries like Saudi Arabia can afford to sell their gas at such low prices because they have abolished all gas taxes. Daily prices have nothing to do with the international price of crude, but in countries like Switzerland and Spain, they are very high because the government wants more taxes. are, in a sense, regulated by the state and, in a sense, change over time. Countries like Saudi Arabia can afford to sell their gas at such low prices because they have abolished all gas taxes. Daily prices have nothing to do with the international price of crude, but in countries like Switzerland and Spain, they are very high because the government wants more taxes.
Equatorial Guinea is ready to modernize or build a refinery to produce the oil it requires. When can we expect it to be operational?
We’re hoping to maintain a level of realism and practicality. We have to tailor our strategies to the size of the Equatorial Guinea market, which is relatively modest given the country’s population size. We can’t take on anything that will overwhelm us, or we’ll have to abandon our current strategy of finding customers. All of these topics on how the economy is doing reassure and comfort us, but to increase production, we need to invest more in activities, and we plan to begin drilling more from next year. Our recent involvement in significant projects, such as the Central African Pipeline System, highlights the critical importance of establishing regional markets.
You met with the Ministers of Mines and Hydrocarbons of Central African countries in Douala, Cameroon, from September 8 to 9, 2022, as part of the Central Africa Business Energy Forum (CABEF). What were the main topics of discussion at this event?
There was talk of being able to discuss not only the current state of the oil industry, primarily oil and gas, but also an initiative that we had launched in Equatorial Guinea; it is actually a regional initiative, not just an Equatorial Guinean initiative. This is referred to as the Central African Pipeline System. The project was inspired by a clear signal from developed countries proposing an energy transition policy. They intend to transition from fossil fuels to renewable energies by 2030.
That is, they will no longer want our gas in 2030. One of the concerns is what we will do in 2030. One solution is to focus on creating our own market rather than waiting for 2030, so that when 2030 arrives, we don’t care because we are supplying our own market. It is obvious that we must understand that the construction of a pipeline system is used to export not only crude oil but also gasoline, gas, and other petrochemicals. The beauty of a pipeline system is that it allows you to create industrial zones where you can have products for electricity and petrochemicals at extremely low costs because the infrastructure is already in place.
It is obvious that we must understand that the construction of a pipeline system is used to export not only crude oil, but also gasoline, gas, and other petrochemicals. The beauty of a pipeline system is that it allows you to create industrial zones, where you can have products for electricity and petrochemicals at extremely low costs because the infrastructure is already in place. It is obvious that we must understand that the construction of a pipeline system is used to export not only crude oil, but also gasoline, gas, and other petrochemicals. The beauty of a pipeline system is that it allows you to create industrial zones, where you can have products for electricity and petrochemicals at extremely low costs because the infrastructure is already in place.
On September 2nd, in Dakar, Senegal, you announced the launch of the Central African Pipeline System at another event (MSGBC Oil, Gas & Power 2022). (CAPS). Could you please tell us more about this initiative? Has a cost estimate been prepared, and have you received positive responses from potential financial partners?
The price has yet to be determined because everything is dependent on the market. Each of the countries will make their own request. Cameroon, for example, can say, “I want a hundred megawatts or this number of products.” When you know what the demand will be, you can make the cut. The other issue is that the projects must be separated. It will be a joint public-private initiative project in this case. As a result, governments will not fund it entirely. The government will think about the project, and then we will divide it into chains. The upstream portion is already taken care of; Equatorial Guinea, Gabon, and Congo are all oil and gas-producing countries.
The second point to mention is bindings. The link is a port from which we can receive products. The pipeline system that supplies the other side is the third. Eximbank of China, Eximbank of the United States, Eximbank of India, Turkey, and others can frequently come in and say they’re ready to fund the pipeline. entire. The final step will be the final product’s reception, which is where the industrial zone and key customers will have to step in. So the project will be divided into different areas, developed, and financed simultaneously not only by the government but also by private investors who, once again, must be clear on how this will work and what their role will be in making it a success, and the studies will be completed by the middle of next year.
Where do plans for implementing CAPS stand as of now?
The year 2030 is the cutoff point. We’re only 7 years old, after all. My fellow ministers in Douala can attest to the fact that I was crystal clear with them. Not putting this off is not an option. For the simple reason that we will no longer have a market to sell our hydrocarbons once Europe, the United States, and Asia all make the energy transition in 2030. That’s why finishing in the allotted seven years is crucial. If we don’t act in the next seven years, the entire industry and the global market will have shifted away from wanting our hydrocarbons because of cheaper alternatives.
How can the Organization of African Petroleum Producers and similar bodies better facilitate energy cooperation among African nations?
The APPO is crucial because we need a governing body with market expertise, similar to OPEC. Yet, it is also a group that has a responsibility to assist us in making better use of these assets. The best example is the fact that everyone here produces oil and gas, but all we do is count our profits. Although most of us associate oil with fuels like gasoline and kerosene, there are a wide variety of other uses for it as well. In addition to petrochemicals, oil and natural gas have numerous other applications. Groups like the APPO are available to advise us, educate us, and point us in the direction of potentially fruitful new fields of work.
As part of its larger mission, the APPO must prioritize regional pipeline development. The ultimate goal of the APPO would be to connect all these pipelines should we build a pipeline in Central Africa, a regional pipeline in Southern Africa, and a pipeline in East Africa similar to the one in North Africa. Producing gasoline and transporting it across Africa will be a breeze. Since Africa is home to the world’s largest mineral reserve, this development will have a profound impact on the continent. It will be unnecessary for mining companies to export minerals if a pipeline system is in place to supply the resources for energy production.
For many years, Equatorial Guinea has advocated for South-South energy cooperation. Do you believe that other African governments share your vision?
I believe so; the political will is there; all heads of state and ministers are discussing it. It is obvious that there will always be those who are uncomfortable with this; those who are more protectionist are the ones who instill fear that it will not happen. Let me provide an example. When Cameroon and Nigeria were working on opening trade barriers three years ago, the biggest fear that many Cameroonians had was that Nigeria would flood Cameroon with all of their products, but the opposite happened. In fact, Cameroon exports more goods to Nigeria because it is a large market.
It is obvious that there has always been a fear of children. The truth is that small children are generally more organized and work much better and more efficiently. As I previously stated, the political will is there, and heads of state are constantly discussing it, but what is critical is that we conduct this trade not only with our neighbors but also with all other African countries, because there are numerous synergies that can benefit all of us. The issue is that we must follow the orders of our president. Our President tells us to travel to Africa, and our President tells us to invest in Africa. It is therefore up to us, as citizens, to strictly adhere to what our heads of state say, and fortunately, I am not alone in doing so, but we bear responsibility.
