GEPetrol was established in 2001 to manage Equatorial Guinea's commercial participation in the oil sector, in particular through the marketing of the state's share of crude production. In its first 18 months, GEPetrol has successfully developed its marketing role, opened an office in London and actively sought the increased participation in the industry by indigenous workers.

GEPetrol's objectives are mainly commercial, while the Ministry of Mines and Energy retains its regulatory function, and formulates national policy in regard to the hydrocarbons and minerals sectors. The long-term objective of GEPetrol is to build an efficient and dynamic business with future ambitions to expand outside the petroleum sector and be active on the international market.

Through applied investment, GEPetrol aims to increase the employment of indigenous personnel and will develop local capacity to contract for services and supplies in the industry.

Established by Decree Law Number 9 of 7th February 2001, GEPetrol is mandated to:

• Manage the state's participation in contracts signed prior to the creation of GEPetrol.
  
• Act as agents for the sale of the stateÕs share of hydrocarbons.
  
• Manage and administer all unlicensed acreage for the benefit of the State.
  
• Advise on and administer environmental policy in the petroleum sector.
  
• Maintain a permanent human resources development program to facilitate access to the most advanced technologies, techniques and knowledge of the petroleum industry.

In order to implement these tasks, GEPetrol is authorized to: act by itself; act through association, merger or acquisition with pre-existing entities in the country or abroad; or to participate as a partner jointly with other national or foreign companies.

GEPetrol is now managing all the unlicensed acreage in Equatorial Guinea. Through Decree Law Number 78, issued on 30th August 2002, all unlicensed areas and all future relinquishments have been declared reserved areas for the state, with GEPetrol administering these areas as the agent of the state.

Industry interest in exploration opportunities in Equatorial Guinea remains high, and we are pleased to announce a new license award to Ocean Energy, as operator, and Petronas Carigali, DNO and Atlas Petroleum as partners to GEPetrol in Block P.

In order to assess and promote our open acreage GEPetrol intends to acquire seismic data in advance of licensing. This will be done by our local seismic company GESeis, which is a joint venture between GEPetrol and Terra Energy Services. Among the first ventures of GESeis were the acquisition of reconnaissance 2D seismic data around Annobon - giving a first impression of the geology in the area, and the acquisition of a 3D seismic survey over blocks H17 and I17 on the Rio Muni Basin Flank.

The reconnaissance 2D seismic results gives support for further work in the area, and GEPetrol welcomes enquiries from any companies that might have an interest in the area. The 3D seismic program over blocks H17 and I17 on the Rio Muni Basin Flank has been used to successfully promote and license acreage in Block P.

This strategy has allowed GEPetrol to assess the value of acreage in advance of signing a petroleum contract, and will shorten the exploration period and accelerate exploration drilling to evaluate the commercial potential of an area.

Crude oil sales are organized through our marketing department, with the London office being the focus of continuous interaction with the market and the oil trading community. Sales for our three different operations - at Zafiro, Ceiba and Alba - are handled through separate contracts. The crude is disposed of by way of a mixture of term contracts and single cargo contracts. GEPetrol currently handles around 50,000 bpd, which will rise as the state's share of production increases from these fields.

GEPetrol is establishing new commercial activities, particularly in oil services. The GESeis joint venture, described above, is GEPetrol's first commercial venture in oil services, with the second being at Luba Freeport.
Luba provides a deep water sheltered location that is being developed as a freeport and oil services center - the port was formally inaugurated in April 2003. GEPetrol is the Joint Venture partner of the private company Luba Freeport Limited and we intend to make Luba the pre-eminent oil center in the region.

Luba's location is exceptional, and its accessibility for large-draught vessels and rigs is unique in West Africa. Luba is blessed with 800m of deepwater ocean frontage and an unrestricted hinterland for storage, bunkering and industrial development.

GEPetrol and the Luba Freeport are actively seeking partnerships from established oil service providers to expand the facilities at Luba and adjoining areas. The first such agreement has recently been signed with Tacoma to provide bunkering facilities. We foresee strong industrial activities developing at Luba over the near term.

GEPetrol will continue with our proactive policy in oil services and we are seeking further partnerships with oil service providers. Areas already targeted include drilling; logging; cementing; completions; and FPSO operations. There are many others and we welcome approaches from potential partners.

Our ambition is to be involved in downstream projects. We are actively discussing with the Alba partners about GEPetrol's participation in the gas monetization projects resulting from the expansion of Alba's production. We will also consider monetization of gas resources unused by other operators to be an area where GEPetrol can have influence and opportunity. We will also consider petrochemical and associated projects, where they can be demonstrated to have commercial sense. In due course, we expect retail operations to be another area of GEPetrol's business.

The President's vision is that GEPetrol should act as a commercial catalyst to stimulate the domestic economy outside the direct oil petroleum sector. In that regard, we will look at participating in a variety of commercial ventures relating to such things as property and infrastructure; transport; and financial services.

Regarding transport, a new airline has now been established, flying directly between Houston and Malabo. This is a sister route to the Sonair/WorldAir flights between Angola and Houston, and we anticipate it to be a similar success. The airline is trading as Sonagesa, and GEPetrol is a partner.