Equatorial Guinea is a significant oil producer in Africa. Crude oil produced by the country is primarily extracted from the Alba, Zafiro, and Ceiba regions. As a result of the recent increase in the extraction of petroleum, the country's economy has grown significantly. In fact, during the period from 1997 to 2001, the country experienced an average GDP growth of 41.6% per year. However, there have been recent accusations of corruption and repression by the government resulting from the nation's newfound wealth.
History Throughout much of the 1990s, Equatorial Guinea was considered to be a poor country with little prospects of economic growth. Although the country had been rather successful at independence due to its cocoa industry, the Macias regime that quickly exerted its repressive forces eventually diminished it to a shell of its former glory. In fact, the cocoa industry accounted for 75% of the nation's GDP in 1968 – the year of their independence from Spain. However, just 10 years later, the overall cocoa production reduced to one seventh of what it was before. In 1980, the Spanish petroleum corporation Hispanoil signed in agreement with the Equatoguinean government to form the joint venture GEPSA. Shortly after, the firm successfully drilled a gas well in the Alba region that appeared to be promising. However, the Spanish oil company decided to withdraw from the country in 1990 due to the lack of a viable market for the gas discovered there. As a result, the government allowed for bids from other companies to extract oil. Walter International was given the rights to drill in the region. Just one year later, a site close to the original drilling site set up by GEPSA began producing oil. Yet, it was not until 1995, when Mobil struck oil in its Zafiro field, that the country truly became a major oil-producing nation. Soon after in 1999, the American oil firm Triton discovered oil at its Ceiba field. Due to several corporate changes through the early 2000s, the major oil companies that operated in the country were now owned by American firms. In contrast, there is a notable absence of British oil firms in the country. While Americans dominate the industry, Shell and BP both had yet to explore for oil. As a result of the prevalent presence of foreign firm in the country, foreign direct investment from all over has flooded the nation.
Production and exploration
From the dramatic increase in oil production in recent years, Equatorial Guinea has managed to claim the spot as the third largest oil producer in Africa. As a result, its GDP per capita is among the highest in the world. In fact, in 2005, the country had an estimated GDP per capita of $50,240 – only second to that of Luxembourg. In terms of oil extraction, accounting for the three main oil fields that the nation counts on, over 425,000 barrels were extracted per day that same year. The true turning point in the nation's oil industry came with Mobil's discovery of oil in the Zafiro region. In just a few years, the overall Equatoguinean production of oil increased more than five times over. To the benefit of Mobil and foreign investors in general, the Nigerian and Equatoguinean governments were able to settle a land dispute in the Zafiro region. This paved the way for more confidence among foreign firms hoping to set up shop in the country. However, another important development was the development of the Ceiba oil field by Triton. This proved to be an important development due to its location; it is located far south from the other two oil-producing regions – away from the Niger Delta. Despite its significant location, it started off as a relatively small operation – producing just 40,000 barrels per day.
Operating agreements As is the case in many other developing countries, the Equatoguinean government maintains a stake in much of the oil operations in the country. However, they in no way represent a key player in the industry. For example, they only retain a 3% share in operations in the Alba field and a 5% share in Zafiro field operations, which are significantly low shares in comparison with other industry players in the region and seems like signs of corruption concerning some major oil agreements and the final conditions agreed. The American-based Riggs Bank was involved in a corruption scandal in which the US government accused them and Obiang of embezzling millions of dollars from the government treasury into personal bank accounts. These allegations highlight the increased level of corruption by high level officials as a result of the amount of wealth that has been brought to Equatorial Guinea's shores.
Political implications
Economic and demographic changes The rapid rise of the petroleum industry in Equatorial Guinea has provided money for the government from two fronts: oil profits and foreign aid. It is important to note that both of these are without any strings attached. Unlike other developing countries that often have to meet certain requirements to receive aid from foreign donors, the control the government retains overs its oil industry gives them a bargaining chip against any sort of involvement in domestic policies. In fact, there has not been a World Bank lending program for the country since 1999. Additionally, its vast oil reserves allow the government to obtain loans backed by future oil revenues. From these financial resources combined, greater investments in patronage and security forces can implemented. Given that pools of resources have been secured, Obiang has made it a priority to increase international legitimacy. Juridical statehood to control the money that entered the country and the benefits that come from them. Specifically, he has personally asked the British government for help in running its government in a more efficient manner and providing for more transparency. In return, the government has received praise from many foreign leaders, as the IMF did in 2003. Despite these initiatives, little has actually been done to reduce corruption and improve the lives of the general population.
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