GLOBAL E&P

First oil was achieved on Dec. 14, 2006, at the Okume B platform. According to Hess, production will grow during 2007 as infield drilling progresses, eventually bringing output to 60,000 b/d peak oil production in 2008.

Construction of the Okume facilities began in August 2004 following approval of the plan of development by the Republic of Equatorial Guinea.

The Okume complex, 241 km (150 mi) south of Bioko Island in the Gulf of Guinea, has two tension leg platforms, three satellite platforms, and a central processing platform. These facilities provide for full field pressure maintenance and artificial lift capability. The Okume complex central processing facilities are tied back to theSendje Ceiba FPSO.

Hess operates the Okume Complex with 85% working interest.

Asia-Pacific

China National Offshore Oil Corp. Ltd. is on the move to increase domestic production. In fact, the company reportedly plans to bring 16 new projects onstream this year, and plans are in place to pursue as many as 60 onshore and offshore projects in the medium term.

Not surprisingly, CNOOC’s focus will be deepwater exploration for oil and gas in the South China Sea, which is already an active area.

Late last year, CNOOC Ltd. and partner Eni made discovery Huizhou (HZ) 25-4 in the eastern South China Sea. Discovery well HZ25-4-1 in block 16/19 in the Pearl River Mouth basin is 180 km (112 mi) southeast of Hong Kong.

The well was drilled to a TD of >3,900 m (12,795 ft) in 102 m (335 ft) water depth. A drillstem test showed a production level of 5,000 b/d of oil.

According to the production-sharing contract, the company has the right to acquire up to 51% working interest in any commercial discoveries in the block.

At about the same time as the Huizhou discovery, CNOOC signed two production sharing contracts with Devon Energy Corp. for deepwater blocks 64/18 and 53/30.

Block 64/18, in the Qiong Dong Nan basin in the western South China Sea, covers 7,712 sq km (2,978 sq mi). Block 53/30 covers 6,313 sq km (2,437 sq m) in the Pearl River Mouth basin. Water depth in the blocks is 300-2,000 m (984-6,562 ft).

Devon will conduct a 2D seismic survey and wildcat drilling during the eight-year exploration period.

Mediterranean

Libya is back in the big picture, and a handful of companies are actively pursuing offshore acreage.

Interestingly, Russia’s Gazprom is one of the companies that has been successful in the bidding process.

On Dec. 20, Gazprom was declared the winner among 45 contenders for block 19. The company won an upstream license for up to 30 years for the block. At present, Gazprom expects to spend more than $200 million for geological exploration and drilling. Plans include drilling six exploration wells.

Developing offshore block 19 in the Mediterranean Sea will be Gazprom’s second largest project in Libya. The first project will be executed under a framework asset swap agreement between Gazprom and BASF. Under the agreement, Gazprom will get a 49% stake in Wintershall Holding that annually recovers 5 million metric tons (5.5 million tons) of oil in Libya.

Libya has 1.5 tcm in proven gas reserves, and the country’s gas potential is practically untouched. Annual production is 7 bcm, with only 83% consumed domestically.

The country is also first in Africa in terms of proven light sweet crude oil reserves, with 5 billion metric tons (5.5 billion tons).

With the door now wide open to investors, many have already lined up for a shot at exploring the country’s prolific hydrocarbon basins.

While Gazprom is just getting into the game in the Mediterranean, Lundin Petroleum is cashing in.

Late in December, Lundin Petroleum AB and Atlantis Holding Norway AS announced that gross oil production from the Oudna field offshore Tunisia now exceeds 20,000 b/d following the commissioning of water injection and artificial lift facilities.

The coventurers have equal shares in the field, with Lundin Petroleum acting as operator.

ETAP, the Tunisian state oil company, has a 20% purchase option in the field that can be exercised up to 120 days from first oil production, which took place in November 2006.

Americas

Statoil celebrated a milestone offshore Venezuela early this year with the completion of drilling operations on the Cocuina-2X well. This well is part of a three-well exploration campaign on block 4 of Plataforma Deltana offshore eastern Venezuela.

The well, 240 km (149 mi) from the Orinoco Delta, was drilled to a TD of 3,406 m (11,175 ft). The well confirmed dry gas in the three intervals tested. Statoil says block 4 potential will be confirmed when the exploration program is completed.

Next on the agenda is the Ballena-1X well, which will be drilled in 350 m (1,148 ft) water depth, the deepest water ever drilled in offshore Venezuela.

Statoil won operatorship of the Plataforma Deltana block 4 license in 2003.

More drilling is in the works offshore Trinidad as well.

Canadian Superior Energy Inc. has scheduled refurbishment work on theKan Tan IV semisubmersible rig, which has been contracted to drill three wells off the east coast of Trinidad. The company announced on March 19, 2006, that the Kan Tan IV had been contracted to drill two wells on the Canadian Superior-operated block 5(C) offshore Trinidad. The drilling of the third well was contracted and announced in November 2006.

The semi will drill the Victory 1, Bounty 1, and Endeavour 1 wells on separate gas prospects on the block, the company says.

While Canadian Superior prepares its drilling operations, BG Group Plc. and partner Chevron have entered into heads of agreement with the National Gas Co. of Trinidad and Tobago Ltd. to supply 220 MMcf/d of gas for up to 15 years beginning Jan. 1, 2009.

The gas will be used in the domestic natural gas market. A fully termed gas sales agreement is expected to be finalized in 2007.

Gas will come from the BG Group-operated East Coast Marine Area, which contains four natural gas fields - Dolphin, Dolphin Deep, Starfish, and Manatee - and the North Coast Marine Area, 40 km (25 mi) off the north coast of Trinidad, which includes the Hibiscus, Poinsettia, Chaconia, and Ixora fields.

Offshore Brazil, Petrobras began Phase 1 of production operations with theP-34 platform on the Jubarte field.

The Jubarte-4 horizontal well is expected to produce 15,000 b/d of heavy oil. Three other wells will constitute a contribution toP-34 to achieve its nominal capacity of 60,000 b/d of oil in the coming months.

Petrobras added production from the second well, ESS-110, at the end of 2006. When P-34 production reaches its peak, the Espírito Santo Business Unit (UN-ES) is expected to produce 135,000 b/d of oil.

Europe

According to an announcement by the Irish Ministry of Marine & Natural Resources in early January, Ireland will hold a licensing round offering exploration blocks in the Porcupine basin this year.

Noel Dempsey, minister for communications for the Marine & Natural Resources Ministry, originally signaled his intention to launch this new round at the conclusion of the Slyne/Erris/Donegal licensing round in 2006.

The acreage on offer in the Porcupine basin covers unlicensed blocks in a 63,500-sq-km (24,517-sq-mi) area that has been classified as Frontier acreage because of the challenging environment of Ireland’s Atlantic margin.

A comprehensive Strategic Environmental Assessment (SEA) of the region will take place before exploration licenses are awarded. External environmental experts will conduct the SEA, and public consultation will form an integral part of the assessment.

Applications for Frontier exploration licenses for blocks in the bidding round probably will be invited in May 2007, with a closing date at the end of October. Bidders reportedly will be limited to applying for a maximum of three blocks in the north of the basin and for a maximum of six blocks in the south.

Central Europe/Caspian

There were some interesting developments late last year in the Aral Sea when the members of a consortium of investors, including Uzbekneftegaz, Lukoil Overseas, Petronas Carigali Overseas, CNPC International Ltd., and KNOC Aral Ltd., signed a joint operating agreement and a single operator agreement to implement a production-sharing agreement (PSA) in the Uzbek sector of the sea.

The original PSA was signed Aug. 30, 2006, in Tashkent. Each member of the consortium holds an equal share.

In late October 2006, the government of the Republic of Uzbekistan adopted a resolution on the measures to implement the project, which provided for the documents to be signed in the two months following.

The agreements set the terms and conditions to establish the operating company, to identify its functions, and to define relations among the parties under the PSA.

Exploration operations will be carried out in two phases. In the first phase, a 2,300- km (1,429- mi) 2D seismic survey will be shot and two exploration wells drilled for a minimal financial commitment of $99.8 million under the program during the first three years.

The consortium expects to select a seismic contractor in mid-February 2007, with seismic operations beginning in March.

A feasibility study will be drafted and approved based on the results of the first phase, with subsequent approval of the commercial terms of the PSA, including the minimal program for the second phase and tax rates and other payments as well as other parameters.

Phase two exploration operations will be undertaken after the commercial terms of the PSA are approved.