Exxon Mobil leaves Equatorial Guinea after nearly 30 years

Exxon Mobil is leaving Equatorial Guinea after nearly three decades, citing its strategy to focus on “lowest-cost and fastest-growth locations.” The company will transfer its holdings to the government.

“Our focus now is on a safe handover of operations and caring for all impacted by this change,” it said in an emailed statement.

Exxon said the exit was part of the company’s long-term strategy, which focuses on investments in the lowest-cost and fastest-growth locations, including Guyana and the Permian.

Exxon’s oil output in Equatorial Guinea has been declining over the years and the oil giant has been trying to sell its key asset Zafiro operation since 2020.

Nigeria and Total

The news coincided with reports indicating that French energy giant TotalEnergies was contemplating an exit from onshore oil operations in Nigeria. This move mirrors the recent decision by Shell to divest its onshore business in the country for $1.3 billion.

During the release of TotalEnergies’ financial results for 2023, CEO Patrick Pouyanne cited fundamental concerns regarding health, security, and environmental policies, stating that producing oil in the Niger Delta posed significant challenges.

Onshore oil production in Nigeria has long been plagued by issues such as pipeline vandalism and infrastructure sabotage, despite government efforts to mitigate these challenges. However, both TotalEnergies and Shell plan to maintain their presence in Nigeria’s offshore oil sector, which offers greater profitability and fewer operational hurdles.

Meanwhile, Exxon’s departure from Equatorial Guinea may have been influenced by similar concerns. According to Ken Medlock, Director of Rice University’s Center for Energy Studies at the Baker Institute in Houston, uncertain regulatory regimes and political instability likely factored into Exxon’s decision-making process.

As Medlock explained to Bloomberg, companies may opt to leave if the risks associated with operating in a particular region outweigh the potential rewards, especially if alternative opportunities offer a more favorable risk-reward profile.