LONDON (Reuters) - Equatorial Guinea is now happy for BG Group, the sole buyer of its liquefied natural gas, to sell the fuel where it can after target market the United States lost its appetite, its deputy energy minister said on Wednesday.
BG Group irked the government earlier this year by selling some shipments of the super-cooled gas to Asia after saying it planned to send most of it to the United States.
Deputy energy minister Gabriel Obiang Lima told Reuters in March the British company would not get any new gas discovered in the country because it was diverting LNG from a plant intended to supply the United States, while BG argued its 2004 contract allowed it to sell to other countries.
The world’s biggest energy consumer has lost its appetite for imported gas as its own output has increased this year, forcing LNG exporters from Qatar to West Africa — who have built facilities to supply the United States — to find alternative customers in a global market that looks awash with gas for the next few years.
“We are not anymore in dispute with BG regarding those deviations because we are creating more markets for our LNG,” Lima said when asked by Reuters whether BG taking its gas to other parts of the world was still a problem for Malabo, given sagging U.S. demand.
“Because of this dispute we have sat down together,” Lima told reporters on the sidelines of an African oil and gas conference in London. “We do have very good cooperation with BG. We have been trading information regarding LNG. We are very confident with what they are doing. We are happy with that.”
The International Energy Agency expects global gas demand to fall for the first time in 2009 and sees the global gas market being hugely oversupplied with gas until at least 2015.
Equatorial Guinea already produces some 3.7 million tonnes of liquefied natural gas per year from its first production facility, or train, which started at its Punta Europa terminal in May 2007. Lima said last month Equatorial Guinea hoped to double its gas exports with a second train within five years, or 2014.
David Hughes, business development director for Africa at U.S.-based Marathon International Petroleum, a major investor in the African country’s energy sector, told the conference forecast oversupply of gas in the global market meant a second train might not need to begin loading cargoes until 2016-17 because of the global oversupply.
Lima said that all the companies involved in exploiting the country’s fossil fuels would meet before the end of 2009 to discuss the gas market outlook over the next few years and suitable timelines for new projects but said he was keen to make the most of the relatively small country’s vantage point in one of Africa’s most energy-rich areas, despite the global gas glut.
“Probably that’s an issue for everybody but we need to keep going, we can’t just stop it. This is a great opportunity and we can’t lose the resource,” he said.
“The other reason is that a lot of these resources, especially the gas. If we don’t do something with it, it will just go away, it will be flared.”