Equatorial Guinea has become a significant oil exporter since the discovery and development of large offshore oil reserves in the mid-1990s. While oil production has increased from 5,000 barrels per day (bbl/d) to current levels of close to 365,000 bbl/d, production rates are declining and affecting government revenues which are almost entirely dependent on the sector. According to the International Monetary Fund’s (IMF) latest data, oil exports accounted for close to 75 percent of GDP in 2007. The hydrocarbon sector – mostly crude oil with liquefied natural gas (LNG) playing an increasingly greater role – represented over 95 percent of government revenue and 99 percent of export earnings.

In recent years, Equatorial Guinea and its neighbors have expanded their offshore oil exploration, which has increased the importance of maritime borders. In March 1999, President Obiang unilaterally adopted an equidistant median line that defined territorial boundaries as stipulated under the U.N. Convention on the Law of the Sea. Cameroon, Sao Tome & Principe, and Nigeria accepted the decision as an improvement over the often disputed traditional boundaries.

Since the 1970s, Equatorial Guinea and Gabon have disputed the ownership of three islands in the Gulf of Guinea, including Mbagne Island. In July 2004, the two countries reached an agreement allowing joint oil exploration in the disputed territories. In February 2006, the presidents of both countries met in Geneva, Switzerland and under U.N. mediation they agreed to resolve any major outstanding border issues.