Multinational oil and gas exploration company Tullow Oil plc will in the next two months launch a bid to acquire 3,000 square kilometers 3D seismic survey after the firm successfully completed its entry into the Africa’s east coast volcanic archipelago of Comoros.
“Tullow’s entry into the Comoros Islands has completed,” the company announced in its 2019 half year results on July 24.
Earlier in November 2018, Tullow had struck a deal with London-based Discover Exploration Ltd to farm into Blocks 35, 36 and 37, offshore the Comoros in the warm Indian Ocean waters of the Mozambique Channel which has not been drilled for oil and gas despite massive discoveries within the region.
“Tullow is now the operator of blocks 35, 36 and 37 and a 3D seismic contract award has been approved by Tullow’s joint venture partners and by the government,” said Tullow on Wednesday.
“With the Environmental and Social Impact Assessment (ESIA) now approved, acquisition of a 3,000 square kilometers 3D seismic survey is expected to commence in September 2019,” Tullow confirmed.
The three offshore blocks are located in water depths of more than 2,000 meters and outboard of Mozambique's offshore Rovuma Areas 1 and 4 where in 2010-2012 circa 200 trillion cubic feet of gas in place was discovered by energy giants Eni and Anadarko and which analysts believe is the world's largest gas discovery in decades according to a previous briefing by Discover Exploration.
However, Discover observes that despite the proximity to these significant hydrocarbon resources, “the Comoros are unexplored: no oil and gas wells have ever been drilled in the country.”
To open up its upstream sector for investment, the Comoros government did pass in early March 2013 the country’s new Petroleum Code, which had been ratified in December 2012 by the National Assembly, that paved way for signing of Production Sharing Contract (PSC) for the three offshore blocks that cover an estimated 16,063 square kilometers offshore Comoros
The parties to the 2013 were Discover Exploration with 60%, which it owned through its wholly-owned subsidiary Discover Exploration Comoros B.V., Bahari Resources Limited with a 40% stake and the Government of the Comoros.
The partnership had previously announced the commencement of a four-year exploration period and an extensive 2D in-fill seismic survey covering the PSC license area with both Discover and Bahari committing themselves to invest in building capacity of local personnel in hydrocarbon development programs.
It is on the basis of the new Petroleum Code that Comoros National Assembly approved in March 2014, the EPSA for the offshore blocks 35, 36 and 37, which a 2018 Competent Persons Report by ERCE, the UK-based independent energy consulting group, said could contain gross mean unrisked prospective resources of circa 7.1 billion barrels of oil and 49 trillion cubic feet of non-associated gas.
Although Discover carried out a range of exploratory studies such as the acquisition of more than 3,900 square kilometers of 2D seismic data, the company approved this year to farm-out to Tullow including operatorship paving way for commencement of Comoros’ first ever acquisition of 3D seismic in the next few weeks.
Drilling of the first exploration well could occur in 2021 according to Discover which sounds optimistic based on previous exploratory studies that seems to indicate “very significant prospectivity of blocks 35, 36 & 37.”
For Tullow, the progress of its Comoros investment plan comes at a time when the company has announced revenues of $872 million in the first six months of 2019 and gross profit of $527 million with a realization of $103 million in post-tax profit.
Tullow, which has diverse oil and gas operations in Ghana, Cote d’Ivoire, Namibia, Mauritania, Zambia, Kenya and Uganda, said it was left with a free cash flow of $181 million in first half of this year after incurring capital expenditure (capex) of $248 million within the same period, more than 56% of it invested in Ghana.
Going into the remaining portion of 2019, Tullow says it plans to stick to its earlier capex forecast for 2019 at $570 million, which, however, may not include the Comoros venture.
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