Equatorial Guinea is looking to strike prepaid oil and LNG delivery deals with commodity traders as OPEC’s smallest oil producer needs money to maintain operating fields and revive its upstream sector, anonymous sources with knowledge of the plans told Bloomberg on Tuesday.
The central African country has been struggling to attract upstream investments in recent years and has seen its oil production drop. The country has also been an LNG exporter for two decades.
But Equatorial Guinea needs capital to cover expenses and the government’s shares in producing and exploratory assets. Prepayment deals with the major trading houses would give Equatorial Guinea money upfront in exchange for crude and LNG deliveries over time, with interest.
The country is looking for $300 million in prepaid funding in return for crude and LNG deliveries over multiple years, according to Bloomberg’s sources.
Prepaid delivery is a fairly common practice between major commodity traders and governments that need cash to fund upstream development.
Last year, the government of Equatorial Guinea signed an Incentives Agreement with U.S. supermajor Chevron for the development of the Aseng Gas Project in Block I, which is set to boost LNG exports from the country.
The country is struggling to reverse a decline in its oil production, especially after Exxon left Equatorial Guinea in 2024 after a three-decade presence in the OPEC member.
As part of its long-term strategy, Exxon divested non-core operations to focus on the Permian, Guyana, and LNG developments globally.
Over the past few years, trading houses have struck several prepaid deals with African oil and gas producers. The Nigerian National Petroleum Company has launched a $3.3 billion crude oil prepayment facility with Afreximbank, Africa’s multilateral trade finance institution, and commodity trader Gunvor International.
Last year, Gunvor also provided financial support to Gabon National Oil Company (GOC) for part of the acquisition costs to buy 100% in Tullow’s subsidiary, Tullow Oil Gabon S.A, for a total cash consideration of $307 million.
By Michael Kernfor Oilprice.com
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