Exxon Mobil Corp., the largest U.S. oil company, has decided to end its 30-year presence in Equatorial Guinea, one of Africa’s smallest but richest nations. The move marks a dramatic reversal for a country that once relied on Exxon’s discoveries to become an OPEC member and a major oil exporter.
According to a statement from the company, Exxon will transfer its remaining investments in the country to the local government during the second quarter of 2024. The decision is “consistent with ExxonMobil’s long-term strategy,” the company said, without giving further details.
Exxon’s exit follows a steep decline in Equatorial Guinea’s oil production, which peaked at over 300,000 barrels per day in 2005 but has since fallen to less than 100,000 barrels per day, according to the U.S. Energy Information Administration. The country’s oil reserves are also dwindling, with only about 1.1 billion barrels left as of 2023.
Exxon’s main asset in Equatorial Guinea is the Zafiro field, which has produced more than 1 billion barrels of oil since it started operations in 1996. The company has been trying to sell the field since 2020 but failed to find a buyer amid low oil prices and political uncertainty.
Equatorial Guinea, a former Spanish colony with a population of about 1.4 million, has been ruled by President Teodoro Obiang Nguema Mbasogo since he seized power in a coup in 1979. He is Africa’s longest-serving leader and has been accused of human rights violations, corruption, and mismanagement of the country’s oil wealth.
Despite its oil boom, Equatorial Guinea remains one of the poorest and most unequal countries in the world, with a gross domestic product per capita of about $8,000 and a human development index ranking of 144 out of 189 countries, according to the World Bank and the United Nations.
Exxon’s departure is not only a blow to Equatorial Guinea’s economy but also to its international standing. The country joined OPEC in 2017, becoming the smallest and third African member of the oil cartel. However, it has struggled to comply with the group’s production cuts and has faced pressure from other members to leave.
Exxon is not the only oil company that is scaling back its operations in Africa, as the industry faces increasing challenges from low-carbon energy transition, environmental regulations, and social activism. In recent years, several major oil companies, including Chevron, Shell, and Total, have sold or reduced their stakes in African oil fields, especially in Nigeria and Angola, the continent’s top producers.
Some analysts say that Exxon’s exit from Equatorial Guinea could open up opportunities for other players, such as China, Russia, or Turkey, which have shown interest in expanding their presence in Africa’s energy sector. However, they also warn that the country’s political and economic outlook remains uncertain and risky.
Source: Bloomberg
