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China – International Deals To Boost Power And Industry Sectors In Equitorial Guinea.

13 May, 2015

 


The government of the sub-Saharan African nation of Equatorial Guinea has signed several agreements with Chinese companies to step up cooperation in the electricity and industrial sectors.

Equitorial Guinea’s Ministry of Mines, Industry and Energy said agreements signed on 30 April included a memorandum of understanding with the China Dalian International Cooperation Group (CDIG) to start “preliminary technical studies” for developing the western industrial city of Mbini.

 

The ministry said Mbini, which lies on the mouth of the Benito River close to the country’s coast, is “planned to be a key reference point for investment in West Africa and an important component in Equatorial Guinea’s plans to diversify its economy”.

 

Separately, the China State Construction Engineering Corporation will support the planning and development of the “petroleum industrial city of Luba”, the ministry said. Luba, on Bioko Island, which lies about 30 kilometres off the coast of West Africa, is set to have a new port and will be dedicated to logistics for the oil and gas industry and other industrial activities.

 

In addition, China’s Sinohydro Corporation will work with the ministry on a feasibility study for building a proposed hydroelectric plant on Equitorial Guinea’s Wele River.

 

The agreements came as China’s leaders pledged to strengthen cooperation with Equitorial Guinea in infrastructure construction and to support local training programmes to boost industrial development.

 

Chinese premier Li Keqiang, who held talks with Equitorial Guinea’s president Teodoro Obiang Nguema Mbasogo in Beijing on 29 April, called for  the African nation to “ensure a more favourable” investment climate for Chinese firms, China’s state run Xinhua News Agency said.

 

Meanwhile, Reuters reported that Obiang Nguema and Chinese president Xi Jinping signed an infrastructure agreement with the Industrial and Commercial Bank of China (ICBC) worth USD 2bn. ICBC said the deal would provide “financial support” to Equatorial Guinea’s government as well as Chinese enterprises there.

 

According to the Equitorial Guinea government’s Investment Guide 2015, oil and gas production is the country’s “most crucial sector”. “The Gulf of Guinea produces roughly 5% of oil globally with Equatorial Guinea being the top oil supplier for the Central African Economic and Monetary Community region and the third largest African supplier,” the guide said.

 

“Some of the most active international oil production companies in Equatorial Guinea include Triton-Hess Energy Limited, ExxonMobil, Marathon Oil Corporation and Noble Energy,” the guide said. “There are now proven reserves of 1.2 billion barrels of oil equivalent. Noble Energy and other medium-sized oil companies from China and Europe are now diversifying the oil sector and playing an increasing role in the country’s development.”

 

In 2012, Equatorial Guinea was the second largest foreign direct investment (FDI) recipient in Central Africa in terms of inbound FDI stocks (USD 13.5bn), directed largely towards the oil sector, the guide said. “Infrastructure is an additional valuable contributor to the Equatorial Guinean economy. Road transportation is a significant focus of infrastructural development with the African Development Bank and Chinese government assistance in road-building projects.”

 

A report published last year said Africa’s growth was projected to accelerate to 5-6% in 2015, levels which “have not been seen since the global economic crisis of 2009”, according to a new report. The Africa Economic Outlook 2014, compiled by the African Development Bank Group, the Development Centre of the Organisation for Economic Co-operation and Development (OECD) and the UN Development Programme, said foreign investment in the continent, direct and portfolio, had “fully recovered” from the effects of the global economic crisis of 2009.

 

References:

 

Please click the link below for more information.

 

Equitorial Guinea government’s Investment Guide 2015 (17-page / 3.56 MB PDF)

 

Africa Economic Outlook 2014 (317-page/7.12 MB PDF)


Pinsent Masons

 

For further information, please contact:

 

Richard Laudy, Partner, Pinsent Masons

richard.laudy@pinsentmasons.com

 

Nick Ogden, Partner, Pinsent Masons

nick.ogden@pinsentmasons.com

 

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