Oil discoveries fuel battle for strategic island off West Africa

At just one kilometer long, the tiny West African island of Mbanie might seem an unlikely focal point for a bitter territorial dispute.

But a string of oil and gas discoveries and developments in the waters surrounding the island are fueling a tense court battle -- the culmination of a years-long feud between OPEC members Gabon and Equatorial Guinea.

Both countries have laid claim to the 74-acre island, which could be a jumping off point for further crude oil exploration, having seen their vital oil production stagnate or fall in recent years.

In October, lawyers and representatives from the neighbors started presenting their arguments to the International Court of Justice in The Hague, with Equatorial Guinea’s case led by Domingo Mba Esono, vice minister of mines and hydrocarbons.

The dispute dates back to the early 1970s, when Equatorial Guinea was in possession of the islands. In 1972, Gabon’s army ejected Equatoguinean soldiers from Mbanie and established its own military presence on the island.

It sparked up again in the 2000s, when the prospectivity of the surrounding waters for hydrocarbons exploration reignited the row. Following years of UN mediation, the countries in 2016 agreed to allow the ICJ to settle the dispute.

Malabo is basing its claim on a 1900 border treaty between former colonial powers Spain and France, which divvied up colonial possessions in West Africa.

Meanwhile, Gabon is relying on the 1964 Bata Convention, which demarcates the land and maritime boundaries of Equatorial Guinea and Gabon and identifies Mbanie Island as a part of Gabon’s territory. Equatorial Guinea, however, insists the document Gabon is using is unsigned and not an original, rendering its case “factually and legally untenable”.

A final, binding ruling by the ICJ on the row is expected in 2025.

According to data from S&P Global Commodity Insights, nearby oil projects off the coasts of the two countries currently produce some 31,000 b/d of crude, and host 743 million barrels of oil equivalent of recoverable resources.

Nearby oil assets include the deepwater producing Ceiba field and Okume Complex on the Equatorial Guinea side, operated by UK-based Trident, Houston-based Kosmos and Norway’s Panoro, as well as the country’s national oil company GEPetrol. The G-13 oil project, operated by the same companies, is expected to peak at 32,000 b/d of production in 2031, according to Commodity Insights data.

Meanwhile, the Nyonie Deep 1 asset, operated by Anglo-French oil firm Perenco, and Capitaine Energy’s Topaze-Pilote project, sit in the North Gabon Sub-Basin and are expected to come online in the 2030s, according to Commodity Insights data.

Stagnant output

Gabon and Equatorial Guinea, both members of the OPEC producer group, rely heavily on oil revenues to underpin government spending, with hydrocarbons their biggest domestic industries.

However, they have seen production stagnate or fall in recent years due to underinvestment, insufficient exploration activity, field maturation and technical issues at ageing wells.

Equatorial Guinea was once a major oil and gas exploration destination, but it has seen output fall 79% from a peak of 289,000 b/d in 2015, leading OPEC to slash its quota in January. The country pumped 60,000 b/d of crude in September, according to the Platts OPEC Survey from Commodity Insights.

On June 1, ExxonMobil, the country’s largest producer, exited the Zafiro field and the country at large, leaving GEPetrol -- which has never operated a major project -- to take over the lynchpin asset.

Meanwhile, Gabon has seen output flatline since 2016 when production was 210,000 b/d, exactly the same total as in September 2024, according to the Platts survey.

Energy security considerations, and the importance of the sector for Gabon’s government, saw it pre-empt Maurel & Prom’s deal for Carlyle’s 40,000 b/d Assala oil assets in June, with help from trading house Gunvor.

Platts, part of Commodity Insights, last assessed Gabon’s Rabi Light crude grade at a $1.42/b discount to Dated Brent on Nov. 4.

Territorial disputes over oil producing regions are relatively common in Africa.

The DRC and Angola recently signed a production sharing agreement for Block 14, operated by Chevron, formally ending a 50-year dispute. That block, where production began in 1999, currently produces some 160,000 b/d of crude.

With officials in both Equatorial Guinea and Gabon scrambling to boost oil production, neither will want to surrender the prospective waters around Mbanie.