July 25, 2024
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OIL & GAS

ExxonMobil Set to Exit Oil Exploration in Equatorial Guinea

US oil and gas supermajor, ExxonMobil, has planned to leave Equatorial Guinea after operating in the Central African nation for about three decades.

ExxonMobil told Bloomberg that it will transfer its holdings in the country to the government and that “Our focus now is on a safe handover of operations and caring for all impacted by this change.”

Exxon also added that the exit was part of the company’s long-term strategy.

That strategy focuses on investments in the lowest-cost and fastest-growth locations.

Energy News Africa reports that these locations include Guyana and the Permian.

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The news coincided with reports that French TotalEnergies was planning to exit onshore oil in Nigeria, following in the footsteps of fellow supermajor Shell, which last month said it would sell its onshore business in the country for $1.3 billion.

Speaking at the release of TotalEnergies’ financial results for 2023, CEO Patrick Pouyanne said that “Fundamentally it’s because producing this oil in the Niger Delta is not in line with our Health, Security and Environmental policies, it’s a real difficulty.”

Onshore oil production in Nigeria has been problematic for decades, with pipeline vandalism and infrastructure sabotage rampant despite government efforts to rein these in.

Both supermajors, however, will remain in Nigeria’s offshore oil sector, which is more lucrative while less problematic, Reuters noted in a report.

Speaking of problems, these could have been a big reason for Exxon’s decision to leave Equatorial Guinea, according to one analyst interviewed by Bloomberg.

Uncertain regulatory regimes and political stability must have been among the factors Exxon considered before deciding what to do with its Guinea business, the director of Rice University’s Center for Energy Studies at the Baker Institute in Houston, Ken Medlock, told the news outlet.

“If those risks mount, companies could pack up and leave if they have other opportunities with a better risk-reward profile,” he explained.

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