Exxon Mobil Corp. intends to exit Equatorial Guinea in the coming months, concluding nearly three decades of oil drilling that led the small West African nation to become an OPEC member.
According to media sources, the company announced it would transfer its investments in the country to the government during the second quarter, as conveyed in an email. “Our focus now is on a safe handover of operations and caring for all impacted by this change.”
The decision to leave is “consistent with ExxonMobil’s long-term strategy,” the company said.
Equatorial Guinea emerged as a major oil hub at the start of the 21st century, propelled by discoveries made by Mobil Corp. in the mid-1990s. Following Exxon’s acquisition of Mobil in 1999, production surged, but over the years, the coastal nation experienced an over 80% decline in output as oil reservoirs dried up and foreign investment waned.
CEO Darren Woods has trimmed global capital spending, redirecting the focus toward the most rapidly expanding and cost-efficient prospects, particularly in locations such as Guyana and the US Permian Basin.
When oil companies strategize capital allocation, they assess operational risks, considering factors such as regulatory frameworks and political stability on the ground, explained Ken Medlock, the director of Rice University’s Center for Energy Studies at the Baker Institute in Houston.
“If those risks mount, companies could pack up and leave if they have other opportunities with a better risk-reward profile,” Medlock said.
Equatorial Guinea experienced an oil boom that benefited the ruling elite, including President Teodoro Obiang Nguema Mbasogo, who came to power in 1979, cultivated political ties with the US, and gave the country one of the highest per capita gross domestic product rates in Africa. Despite decades of oil production, the nation exhibits some of the continent’s poorest social indicators and a problematic human rights record.
Exxon’s primary asset in Equatorial Guinea is the Zafiro field, which yielded over 1 billion barrels over two decades. In 2022, Exxon revealed plans to decommission the field’s platform after it was shut down due to a safety incident.
Before the shutdown, Exxon was extracting about 45,000 barrels a day from the field, a fraction of its global daily production of 3.8 million barrels.
Exxon Mobil’s exit raises questions about the future of foreign investment in Equatorial Guinea’s energy sector and the potential for increased state control over oil production.