Equatorial Guinea seeks $300 million oil, LNG prepay deals to fund production revival

(Bloomberg) – Equatorial Guinea, OPEC’s smallest member, has turned to commodity trading companies for prepayment deals on oil and liquefied natural gas to help finance a revival of domestic hydrocarbon production.

The Central African nation is looking for $300 million in return for deliveries of crude oil and LNG spread over multiple years, according to people familiar with the matter, who asked not to be named because the information isn’t public. 

It’s the latest example of an African country seeking dollar financing from trading houses, which are keen to put sizable cash reserves to work following a stretch of record profits. For producing nations on the continent, this has become a way to fund their share of project developments or acquire assets as banks retreat from fossil fuels. For traders, the incentive is access to barrels.

Gunvor Group struck two deals in Gabon to help the country buy assets from Tullow Oil Plc and Carlyle Group’s Assala Energy. Traders also formed the lender group behind a $3.3 billion facility raised by Nigeria, to be repaid in oil cargoes.

GEPetrol and Sonagas, the state oil and gas companies in Equatorial Guinea, didn’t immediately respond to requests for comment. The oil ministry also didn’t reply to a request for comment.

The government is looking for alternative funding to cover the costs of maintaining producing fields, according to another person. Equatorial Guinea in 2024 said it held talks with Trafigura Group about the possibility of $2 billion to support oil development, but no announcement of a deal followed.

Already the smallest member of the Organization of the Petroleum Exporting Countries, Equatorial Guinea’s output declined to 40,000 bpd in November, roughly a third of its level four years earlier, as the country struggled to attract investment.

Exxon Mobil Corp. left in 2024 after almost three decades, citing its long-term strategy, with state-owned GEPetrol taking over the main assets.

Even so, Equatorial Guinea has maintained interest in the gas sector. An LNG exporter for nearly two decades, it counts companies including ConocoPhillips Co. and a local unit of Chevron Corp. among participants in its gas operations.

Common in commodity trading, prepayments provide upfront cash that is repaid with interest through commodity deliveries over time. Traders often refinance part of the arrangement with banks.