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Statoil, ExxonMobil plan aggressive Tanzania exploration

  • SOURCE: | Editor
  • lcStatoil and ExxonMobil have made another big gas discovery off Tanzania and plan a drilling campaign over the next two years, lifting the East 4African country’s hope of becoming a major gas exporter.

    The firms found 2-3 trillion cubic feet (tcf) of gas in place, or 360-540 million barrels of oil equivalent (boe).

    That brings their total gas resources in place in the licence to 17-20 tcf or 3.06-3.6 billion boe, said Statoil, the block’s operator.

    Britain’s BG and Ophir Energy have also made big discoveries in Tanzania and a source told Reuters earlier that the four have submitted proposals to build an onshore liquefied natural gas plant in the southern region of Lindi.

    No new LNG project has won a final investment decision anywhere in the world outside the United States for almost two years because of huge cost increases across the
    industry, a glut of LNG from places such as Australia and a shale boom which has made
    the United States self-sufficient in natural gas.

    However, Tanzania’s relative cost advantage, abundance of gas and proximity to Asia’s main LNG buyers is seen boosting its chances.

    “We have been through the site selection with BG and basically all the technical data has been submitted to the government,” Nick Maden, Statoil’s head of exploration activities for the western hemisphere, told Reuters.

    ‘We are awaiting a final decision. We are hoping soon. We are hoping before Christmas. But these things often take time.”

    The firms are aiming for a final investment decision on the Tanzania plant in 2016.

    More drilling
    Statoil said it planned to drill 9 to 12 exploration and appraisal wells in Tanzania by
    early 2015 and has secured a rig, often the biggest constraint in exploration, through 2016.

    “We are encouraged by what we see,” Maden said. “We really are not fully concluded
    on what sort of potential (the licence has). But we see potential to increase the volume further.”

    Analysts said the news was clearly positive for the Statoil stock with Swedbank First Securities estimating the value of the discovery at around 1 crown while Pareto Securities estimated at it at around 0.9 crown.

    At 0937 GMT, Statoil shares traded unchanged at 139.5 crowns, underperforming a 1.1 percent rise in the European oil and gas index.

    Statoil has been the most successful offshore explorer this year with big finds in Canada and Tanzania. Prior to Friday’s discovery, it had found around 900 million barrels of oil equivalent, indicating that its reserve replacement ratio would stay above 100 percent fora third consecutive year.

    Next year it plans to focus exploration on Tanzania, East Africa, the Gulf of Mexico and Norway. It also hopes to return to Canada as soon as it can secure a rig.

    Source: B&FT

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