Algeria has moved its next bid round date to early 2007. Plans are to offer 10 packages of open blocks. The 7th Bid Round announcement was originally planned for October2005, but has been affected by the lengthy, drawn out reform in the responsible ministry. Plans were delayed in order to establish two new agencies under the Ministry of Energy and Mines, one of which is to conduct the bid rounds. Then again the Ministry was bogged down with the passage in 2005 and the revision in 2006 of the Hydrocarbons Law, whichintroduced a windfall profits tax, among other things. As an African opportunity, Algeria is facing competition for exploration investments from Libya, Nigeria and Angola. It has plans to increase crude oil production to 1.5 MMBOPD in the short term and to 2.0 MMBOPD by 2010 from the current 1.4 MMBOPD. In this regard, the country must replace crude oil reserves by attracting FDI (foreign direct investment) most of which is made by FOCs (foreign oil companies).
The Cabinda Central Licence Block B looks dicey, but…
AFREN PLC, THEAIM LISTED independent targeting African resources, has shown up in Angola, scouring for opportunities. Its first choice, to go by the map, doesn’t look exciting. The company has entered into a Heads of Agreement with Gulf Energy Resources to acquire a 5% stake in the Cabinda Central License Block B, Cabinda province, onshore Angola. What the map does not show is that a number of wells did encounter- in the general onshore Cabinda area-encouraging oil shows in fractured basement and in the pre-salt sediments. In actual fact, most of the wells in this area were drilled in the mid 1960’s on minimal seismic data or just gravity data, or-for that matter-rudimentary surface geology mapping. Discussions with some oil industry analysts on this acquisition by Afren, reveals that it is geologically and strategically a very well placed move by the company. From a regional hydrocarbon perspective, the onshore Cabinda area is optimally placed in that it is the onshore extension of the prolific geology of Block 0, where Chevron is producing over 400,000BOPD. The NW-SE geologic trend of Chevron’s oilfields show that this trend should extend into the onshore area. Had there not been 27 years of civil war in Angola, this area could have been explored and probably developed and placed on production decades ago.
Devon Energy is the operator of the 1,125 sq km license. Other partners in the block are Repsol 25%, Sonangol 20%, and Petrogal with 20%. Devon plans to re-commence exploration work in the License subject to the effectiveness of the Production Sharing Agreement (PSA).