Houston-based exploration company Vaalco Energy and its partners have finalised a production sharing contract (PSC) for Block P offshore Equatorial Guinea. The PSC provides for a development and production period of 25 years from the date of approval, which was secured from the Government of Equatorial Guinea in March.
The project’s joint operators are VAALCO Energy (60%), Equatorial Guinea’s national oil company GEPetrol (20%) and Nigerian oil and gas company Petroleum International (20%).
Vaalco is reportedly nearing a final investment decision on Block P, which will be followed by a drilling campaign. The company aims to double its crude production to more than 50,000 barrels per day by 2027 to grow its output from maturing fields.
Block P is home to a resource base of more than 20 million barrels of oil as well as the Venus discovery, located in the Rio Muni basin. The Venus oilfield is set to start commercial production in 2026 with a forecasted peak in 2028 from three wells, according to Offshore Technology’s parent company GlobalData.
Vaalco has recently attempted to strengthen its African portfolio via a series of transactions. In March 2024, it acquired Swedish offshore exploration company Svenska Petroleum Exploration in a $66.5m (Skr694.07m) deal, which included Svenska’s 27% interest in the Baobab field in Block CI-40 offshore Côte d’Ivoire.
Vaalco is now planning a dry-docking and upgrade of Baobab’s floating production storage and offloading unit in 2025, which is expected to lead to significant production growth from the field’s drilling programme scheduled for 2026.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAdditionally, the company is eyeing locations for its next drilling campaign at the Etame block offshore Gabon, with operations set to begin in late 2024. To date, Vaalco has extracted 127m barrels from its Etame permit and is anticipating continued production over the next decade.
The African Energy Chamber (AEC) has commended Vaalco’s expansion strategy in Africa, stating that its latest PSC marks a critical step towards reversing oil production declines in Equatorial Guinea.
Prospects for oil production in Equatorial Guinea
GlobalData predicts that the production of crude oil and condensates in Equatorial Guinea will decrease at a rate of 44% from current levels by 2028.
This is partly attributable to the natural decline of the country’s largest oilfields, including the Okume Complex and Aseng, which date back to 2001 and 2007, respectively.
The decline is compounded by the upcoming exit of major oil companies from the African country in the coming years. ExxonMobil, which currently operates the nation’s biggest producing oilfield, Zafiro, intends to leave after its licence expires in 2026.
The AEC believes that Equatorial Guinea has the potential to contribute to long-term energy security across West Africa if the investment outlook improves.
On 24 June, Chevron and GEPetrol signed PSCs with Equatorial Guinea’s Ministry of Mines and Hydrocarbons to initiate fresh exploration and production campaigns in blocks EG-06 and EG-11, which were previously owned by ExxonMobil.
This deal and Vaalco’s are positive signs for the resurgence of exploration and production in Equatorial Guinea.
