AZO,AZONTO PETROLEUM LTD, Afren JV ?

Upstream oil and gas exploration advances as international companies snap up blocks

Afren has also stated that it would consider entering into a joint oil and gas development programme.

The Ivoirian government is prioritising upstream oil and gas exploration in offshore blocks, and adopting strict policies to limit speculative activity. According to the Ministry of Petroleum and Energy (Ministère du Pé trole et de l’Energie, MPE)

total gas production saw a 10.33% increase to 29.98 million British thermal units (MMBtu), up from 27.17 MMB tu. While the CI-11, CI-26 and CI-27 fields continue to see strong production levels, the CI-40 block, which contains the Baobab field and is operated by Canadian Natural Resources (CNR), has seen diminishing production.

Foxtrot, majority-owned by French conglomerate Bouygues, plans to invest CFA500bn (€750m) to boost natural gas output from its CI-27 block, the country’s biggest-producing natural gas field, over a five-year period. The company secured a guarantee from the Multilateral Investment Guarantee Agency for up to €339m for an equity investment by SCDM Énergie that will help fund upgrades to the existing production platform in CI-27. The company is also seeking a partner to buy a 12% share of the gas field.

With proven reserves of 611bn cu ft, the Foxtrot field, located in the waters off Jacqueville, provides the majority of natural gas to the Azito, Vridi and Ciprel power plants. It has a current capacity of 110m-120m cu ft of natural gas per day, which is expected to rise to 140m cu ft starting in mid-2013, with a maximum output of 154m cu ft following the completion of the expansion project. The capital injection will also go toward funding the drilling of seven new wells by the end of 2014 and the building of a new production platform in the Marlin gas field in mid-2015. The Marlin gas field has an anticipated output of 7000 bpd. In April 2013, RAK Petroleum, an Emirati operator, acquired an indirect 8% interest in the CI-27 block through its takeover of the US group Mondoil Enterprises.

Afren, the AIM-listed Nigerian oil and gas company, has agreed to sell its 100% stake in the Lion Gas Plant and 47.96% stake in the CI-11 block to Petroci. With capacity of 75m cu ft per day, the plant processes gasoline and butane from natural gas from its CI-11 block and CNR’s CI-26 (60 km south-west of Abidjan) and CI-40 blocks (25 km offshore).

As of 2015, the CI-11 block, which contains the Lion oil field and Panthere gas field and lies 13 km offshore, has a capacity of 4933 bpd of crude oil and 23.9m cu ft per day of natural gas. Afren still holds 65% interest in the CI-01 exploratory block, which contains the Kudu, Eland and Ibex yields, and sits to the eastern-most point of Ivoirian territorial waters; it has estimated reserves of 102bn cu ft of natural gas and 20m barrels of oil, respectively.

Given that the block is located to the north-west of the Jubilee and Tweneboa oil and gas finds in Ghana, both of which have attracted the attention of international operators, it could hold considerable promise. With Petroci a development partner, Afren is currently taking steps to prepare a field development plan, which includes a seismic dataset.

Vitol, started an exploration programme for the 675-sq-km Hippo field in its CI-202 block, which sits 30 km south of Abidjan.Vitol plan to undergo more technical assessment of the block’s prospects before drilling exploration wells. Afren has also stated that it would consider entering into a joint oil and gas development programme with Azonto for the CI-01 and CI-202 blocks, which would help meet the government’s goal of increasing natural gas supply for power generation.

CNR has also launched a drilling programme in the deepwater Baobab field. It has brought in a rig to drill development wells to boost flagging production from the field, which is 900-1300 metres deep.

PanAtlantic Exploration, a Russian-American group, and Russian major Lukoil made a discovery in deep offshore block CI-401, which is also located adjacent to the maritime border with Ghana and north of Total’s CI-100 block. The companies drilled a well at 1689 metres and found deposits of light oil. Lukoil also announced in 2013 plans to invest €310m in an exploration programme that includes drilling three wells. The Russian company is now undertaking exploration activities on five offshore blocks.

Tullow Oil’s findings in deepwater block CI-103 also suggests that rich oil deposits in western Ghana extend into Côte d’Ivoire, with discoveries of light oil in a Turonian fan system in the block. Tullow, which is also the operator, holds a 45% stake in the block, while Anadarko Petroleum holds a 40% interest and Petroci 15%.

Finally, the Directorate General of Hydrocarbons has recently announced a restricted tender for exploration of the CI-506 and CI-507 offshore blocks.

Petroci’s acquisitions , including Afren’s natural gas assets and raising its stake in Gazelle field to 26%, is part of the company’s mandate to develop the energy sector and support the discovery of more oil and gas assets in collaboration with partners. Given profits of CFA43.9bn (€65.9m) in 2011, Petroci has the means to contribute to further exploration.

Azonto (ASX: APY and AIM: AZO)
is a 35% shareholder in Vioco Petroleum Limited ("Vioco") which holds an 87% working interest (100% paying interest) in, and is operator of, the CI-202 Block, Cote d'Ivoire. Vitol E&P Limited holds the remaining 65% interest in Vioco.

CI-Energies, the Ivorian state owned utility, recently signed a non-binding MOU with a reputable international company which may finance, develop and operate the independent power project ("IPP") at Grand Bassam and upgrade the power line infrastructure for the proposed Vioco integrated gas to power project. The intention is for the scope and schedule for the IPP to be agreed by the end of May 2015.

The ESIA environmental impact assessment report into the Grand Bassam project site has been completed and, following a period of public consultation, was submitted to the Cote d'Ivoire Environmental Agency (ANDE) on 20 March 2015 with a view to obtaining formal approval by the Ministry of Environment and Sustainable Energy by mid-May 2015.

Vioco Board has identified Hippo North as a potential shallow water exploration well candidate and further subsurface focused work is being undertaken to progress Hippo North as a drill ready exploration well target. A final decision on the drilling of Hippo North will need to be made by Vioco by 7 October 2015, subject to budgetary approval.