Upstream article, page-59

Here you go H... the full article from our good friends at Upstream.

gh.

-----------

Senegal's Energy Ministry and state-owned Petrosen are challenging oil companies to meet their drilling obligations without delay, although the government has complicated matters by insisting all incumbents produce a bank guarantee if they expect to negotiate licence extensions.

After Thierno Sall was sacked from his role as energy minister in May, Senegal is keen to shore up the momentum gained from a spate of deep-water discoveries.

President Macky Sall has called for an “accelerated exploration programme", with a particular focus on smaller players.

Nigerian independent Oranto Petroleum, for example, aims to shoot 1500 square kilometres of 3D seismic data over its wholly-owned shallow-water Cayor and St Louis blocks.

Much of the proposed shoot will focus on St Louis, which Upstream understands is deemed the more prospective.

Cairn Energy and BP have substantially de-risked the acreage with their huge oil and gas finds, especially the St Louis licence, according to a senior executive.

Oranto is also stepping up efforts to secure a farm-out partner, or may sell off both blocks, preferably to the same buyer.

Upstream understands Petrosen has already indicated privately to BP that Oranto's Cayor and St Louis acreage might make a productive addition to the supermajor's portfolio, though several other players have expressed interest, prompting the Nigerian independent to speed up exploration work.

The St Louis seismic tender was issued hours after Oranto's founder and chief executive Prince Arthur Eze concluded two days of talks with Senegal's Prime Minister Mahammed Dionne, securing a gazetted decree to extend the company's drilling deadline on both blocks for two years.

Dionne now doubles as Energy Minister on the Strategic Policy Committee for Oil & Gas (Cos-Petrogaz).

Oranto’s success has boosted hopes extensions will be offered to other smaller players, with looming drilling commitments but insufficient seismic data to determine drill sites.

However, the decision to impose bank guarantees in place of normal corporate guarantees may seriously disrupt the ability of smaller players to meet their obligations.

Getting a bank guarantee without full 3D data is difficult even after acreage has been de-risked, said an executive of one key player.

Other operators canvassed by Upstream agreed, but suggested Cos-Petrogaz may accept a lesser form of security from operators with substantive work already to their credit.

Meanwhile, use of political capital and influence overseas may have allowed Bucharest-based Tender Energy to be granted extensions to the onshore blocks Saloum and Senegal Onshore South, despite chief executive Ovidiu Tender languishing in a Romanian jail for fraud.

However, Tender's title may weaken if the licence stays inactive after parliamentary elections are concluded on 30 July.

Bordering Mauritania to the north, T5 Oil & Gas’ onshore Louga licence needs 1000 kilometres of 2D seismic to be shot before drilling can start.

Upstream has been told a negotiated extension is “imminent”, as the Energy Ministry tries to reduce the extra time allotted.

African Petroleum was thrown out of the Rufisque Deep last month when Petrosen controversially reallocated to Total, despite signing an eight-week “binding exclusivity agreement” on 18 April with an undisclosed player to help start drilling by this November. This rescue deal is set to expire in mid-June.

Sall’s "accelerated exploration" programme would stall if African Petroleum chose to litigate in defence of its Rufisque title. Such a move would aggravate country risk perceptions for potential farm-in players pondering whether to join distressed minnows approaching their deadlines, but could also open the possibility of African Petroleum landing an extension to Senegal Deep as a quid pro quo for keeping out of court.

For African Petroleum to know where to drill, it needs results from cross-border 3D seismic jointly planned with adjacent acreage holder Elenilto, which is negotiating an extension to its Senegal Shallows block.

In the highly prospective Djiffere block, operator Trace Atlantic and partner Cap Energy are courting suitors to replace Australia’s Far Ltd.

Far claims to have 75% farm-in option on the asset despite Trace and Cap declaring the deal void, and has not released seismic data it acquired on Djiffere.

Trace is mulling a fresh tender for 3D seismic far more extensive than that acquired by FAR under its option accord, in order to meet its drilling commitment by June 2018.

Upstream understands Trace and Cap are seeking a copy of Far's data from Petrosen.