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Client Work

Developing Equatorial Guinea as a gas mega-hub

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Ministry of Mines and Hydrocarbons, Equatorial Guinea

Fasken advised the Ministry of Mines and Hydrocarbons (`MMH`), Equatorial Guinea (EG), on the execution of definitive agreements for the monetization of gas from the Alen Unit, located offshore Equatorial Guinea (EG) and operated by Noble Energy EG Ltd.
The definitive agreements commit for tolling Alen Unit gas through Alba Plant LLC’s liquefied petroleum gas (LPG) processing plant and EG LNG’s liquefied natural gas (LNG) production facility, both located in the Punta Europa LNG terminal. Marathon Oil is a major shareholder in both Alba Plant LLC and EG LNG.
The Alen Unit is comprised of the Block O and Block I contractor groups. The members of the Block O contractor group are Noble Energy, which serves as the technical operator, Glencore Exploration Limited and Compañía Nacional de Petróleos de Guinea Ecuatorial (GEPetrol). The members of the Block I contractor group are Noble Energy, which serves as the technical operator, Glencore Exploration (EG) Limited, Atlas-Oranto Petroleum International Limited, Gunvor Resources Limited, and GEPetrol.
Fasken advised the MMH on the definitive agreements, covering the full oil and gas chain, from upstream (including reviewing PSCs, unitization and operating agreements); midstream (negotiating lifting and storage agreements) and downstream (negotiating tolling and lifting agreements). Fasken also advised and negotiated related corporate agreements, including the agreement pursuant to which Sonagas GE, the National Gas Company of EG, will increase its stake in EG LNG from 25% to 30%.
A 24-inch 70 kilometre pipeline will be constructed from the Alen platform to the onshore facilities at Punta Europa, where it will be processed and transported for sales on the global market. First gas is expected in Q1 2021. Gross capital expenditures for the development are estimated to be $330 million.
The Government of EG has a vision of developing EG as a Gas Mega Hub. The execution of the definitive agreements is the first step in realizing this vision. “This is the kick off of our Gas Mega Hub and we will do more deals on other gas assets in the country that must be developed. Development of the Gas Mega Hub will ensure a thriving Equatorial Guinea gas industry into the future. It is my firm belief that it will create opportunities for development of our citizens in the Upstream and Downstream segments of the country’s oil and natural gas industry” said the Minister of Mines and Hydrocarbons,  Gabriel Mbaga Obiang Lima.
The future Gas Mega Hub will be comprised of the Alen unit and additional offshore gas hubs, all feeding gas into the Punta Europa facilities. There are very few gas projects getting off the ground in Africa, let alone projects of this scope and complexity.
The Fasken team was led by Abayomi Akinjide supported by Laura Bradley and Rachel Yurkowski. This project is expected to deliver between $1.5 to $2 billion dollars in additional state revenue over the life of the project, in addition to supporting the employment of many Equatoguineans.


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