CNOOC Tries Its Luck Again In A Bad Address - Africa’s premier report on the oil, gas and energy landscape.

CNOOC Tries Its Luck Again In A Bad Address

By Toyin Akinosho, Publisher

Chinese behemoth CNOOC will be drilling its second well in the S Block offshore Equatorial Guinea, sometime after mid- August 2014.

China’s largest offshore oil producer has drilled only one well since it signed an agreement with Equatorial Guinea in 2006 to explore the 2,287km2 block off the coast of Rio Muni, with water depth ranging from 30 to 1,500 meters. That well encountered non-commercial pool of crude oil.

The deepwater semisubmersible rig Atwood Hunter will be drilling the well for a day rate of $337,000 for a minimum term of 90 days. The contract includes an option for one additional well.

Block S, located adjacent to Hess operated 20,000BOPD Ceiba field, is part of an area regarded as a bad address on the Equatorial Guinea concession map. Every well that has drilled in the vicinity of the Ceiba- Okume complex since 2003 has been a commercial failure. Chevron, Petronas and Nexen have all plugged and abandoned either dry holes or wells with minor oil and gas shows in the area. Yet this part of Rio Muni basin hasn’t lacked customers. As Chevron and others have walked out, Murphy, Xuan Energy, Elegance and Oleo eGas have signed in since 2012.

New finds in the country have, in the last nine years taken place in the Douala Basin (Noble Energy’s Alen, Aseng and co) and in the north east, where Ophir has encountered a string of large gas pools, but these are far away from Rio Muni.

If the CNOOC well throws up encouraging results, the company expects it may stretch the term of agreement with the driller Atwood Oceanics. In that case the cost of drilling will be cheaper “The day rate for days 91 to 180 shall be $330,000”, the drilling company discloses. “Any term in excess of 181 days shall have a dayrate of $325,000”. The Atwood Hunter is expected to commence the contract mid-August 2014.

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