Other countries trying to get into West Africa E&P

Opportunities for smaller producers

Marshall DeLuca
Business Editor

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Although West Africa countries with large production areas such as Angola and Nigeria receive most of the attention, other countries there are making significant efforts to boost exploration and production offshore and attract interested producers.

Smaller African countries have recently begun offering leases and production sharing agreements (PSAs) in their respective offshore areas to attract foreign investment. These include The Gambia, Morocco, Mozambique, Namibia, São Tomé and Príncipe, Senegal, and Tanzania.

Some of these countries have proven reserves and have had marginal exploration attempts in the past, but others, such as The Gambia, are putting blocks on offer for the first time. Regardless, the governments of these countries are trying to strike while interest is high in West Africa geology and take advantage of the focused attention on this region.

The Gambia

The Gambia has stepped into the game with the recent award of its first offshore petroleum production license. The license was awarded to a consortium of Planet Oil of London and Balmain Resources of Perth, Western Australia. The license covers a total 20 exploration units in Blocks A (12 units) and B (8 units). The terms of the agreement call for new geophysical surveys and seismic reprocessing during the first year of the contract with the first well required during the second and third years.

Also, Australian-based West Oil and British Fusion Investment have signed a technical co-operation agreement granting the company's the right to choose their own exploration block in return for evaluating offshore areas. The companies have begun collecting data to begin the study.

Morocco

Morocco has awarded LASMO a "Reconnais sance License" covering about 11,400 sq km of the Ras Tafalney area off the country's western coast. The license will allow the company to complete an evaluation of the drilling potential of the area for an initial term of one year.

LASMO plans to acquire 700 km of new seismic and magnetics/gravity data in addition to reprocessing 700 km of existing seismic data as part of the evaluation. The license is adjacent to LASMO's onshore Essaouira Reconnaissance License, which was awarded last year.

Morocco has also awarded one of the largest acreage permits in recent years to Vanco Energy. Houston-based Vanco signed an Exclusive Reconnaissance Permit with ONAREP (the state oil company of Morocco) for the Safi Haute Mer block that extends from the Atlantic shore to 3,000 meters of water.

Terms of the permit call for a one-year geological and geophysical study to be undertaken by Geco-Prakla using the company's M.V. Polshkov seismic vessel. The study will include a 2D survey of an estimated 1,800 km of the block and will begin this month.

Mozambique

Empressa Nacional de Hidrocarbonetos (ENH), the state oil company of Mozambique, and the government of Mozambique have signed three production sharing agreements with a consortium consisting of Sasol Petroleum International, Arco Mozambique, and Zarara Petroleum Resources. The first agreement was signed in May and called for the continuation of seismic surveys and the drilling of five wells in seven years on the Termane gas field. The investment in this agreement is valued at $10 million. Drilling began on this property in August.

The other two PSAs relate to the Sofala and M10 exploration permits. Under these agreements, the consortium will acquire new seismic data in the blocks and drill five wells in the Sofala block and four wells in the M10 block in a period of seven years. In the event hydrocarbons are discovered, further wells will be drilled to assess the potential of the discovery. The consortium plans an investment of $30 million. Drilling is expected to begin in early 1999.

Arco has been named the operator of the consortium's blocks and has tendered for a jackup to drill one well with option for up to two for the Sofala and M10 areas. Arco holds 47.62% interest, with Sasol holding 47.62%, and Zarara 4.76%.

BP also signed a PSA with ENH and the government of Mozambique in February for the Zambezi Basin. Under this agreement, the company has exclusive rights to 40,000 sq km of prospective offshore acreage in the Zambezi delta. The company has already begun a 15,000 km 2D seismic program on the area. This is pursuant to a memorandum of understanding signed in 1996 in which BP carried out a technical study of the data held by ENH on 80,000 sq km of the Zambezi Basin.

Namibia

Namibia has opened the country's Third Licensing Round this month with new terms designed to allow the country to remain competitive in the market. The licensing will include the country's deepwater region that has been evaluated to contain potential similar to deepwater discoveries made north of the region.

The new terms call for a reduction in the rates of the Production Royalty and Petroleum Income Tax, establishment of a trust fund to cover field abandonment costs, and an enlargement of the ring-fence on exploration expenditure for income tax purposes.

São Tomé/Príncipe

The Democratic Republic of São Tomé & Príncipe entered into a joint venture with Environmental Remediation Holding Corporation (ERHC) to develop the country's potential offshore reserves in the Gulf of Guinea. Estimates claim that the region holds oil reserves greater than or equal to those of Kuwait with several

billion bbl discoveries made adjacent to the country's borders.

Under the agreement, the São Tomé and Príncipe National Petroleum Company, STPETRO, was created of which ERHC is a 49% managing partner. The joint venture planned a licensing round for early 1999 comprising of 64,550 sq miles. Schlumberger Geco-Prakla offered to perform additional seismic data acquisition (5,000 km of 2D seismic studies) on the region on offer and act as technical advisor and coordinator of the lease sale to ERHC and STPETRO.

Mobil has won an option on all 22 blocks in the deep offshore area on offer. The company signed a "technical assistance agreement" with ERHC and São Tomé that would allow Mobil to make an 18-month technical evaluation of the hydrocarbon potential of the acreage. Once completed, Mobil will hold an "exclusive option" on all of the acreage to acquire a production sharing contract with STPETRO.

The offshore areas are located in the country's Exclusive Economic Development Zone, which borders the waters of Nigeria, Equatorial Guinea, and Gabon. Six of the blocks are on the eastern rim of the zone with the remaining 16 in the northern region.

Senegal

Societe des Petroleos du Senegal (Petrosen), the state oil company of the Republic of Senegal, has granted exclusive rights for the evaluation of the country's entire 16 million acre offshore region to Benton Oil and Gas. Under the agreement, Benton will evaluate and reprocess geophysical data for the region from the Mauritania border in the north to the Guinea-Bissau border in the south, and choose certain blocks for further data acquisition and exploration drilling. Benton will receive between 80 to 95% interest in the event of a discovery.

Activity has also begun in the Senegal-Guinea-Bissau Joint Authority Area. West Oil has signed a six-month technical co-operation agreement through its joint venture with Fusion Investments with the Agence de Gestion et de Cooperation entre la Guinea-Bissau at le Senegal (AGC) and with Senoil of Senegal for the evaluation of hydrocarbon potential of the area.

West Oil will assess wells and seismic and other data and produce a report for AGC to promote the area in return for the right to apply for a concession over a block of at least 1,000 sq km of its choice with a pre-agreed work program. West Oil has contracted IKODA Limited to undertake the work, which has already begun. The evaluation area does not include the Dome Flore heavy oil deposit, the region's only known oil play.

Tanzania

Tanzania is also getting in the game by outlining its generous terms, open door policy, and potential of untouched deepwater exploration areas such as the South Ruvu, Ruhuhu, and Seleous basins for prospective producers. The country is offering, through no formal bidding rounds, extremely flexible exploration terms for 11 years with a 25-year development period and a 20-year extension.

The national oil company, Tanzania Petroleum Development, has also offered to pay taxes and royalties with a maximum interest of 20% in projects. No signature and production bonus would be required and companies are offered import tax exemption on all equipment used in exploration.

Several firms have entered into agreements with Tanzania including Antrim Resources of Canada who signed a production sharing agreement last year, which included offshore acreage. Canop, also of Canada, entered into a production sharing agreement for offshore acreage and drilled two wells, one of which had oil shows. Also, a third company, Ocelot Energy, has interests in the country with the Songo Songo gas field. Ocelot plans to bring the field onstream by the end of 1999.