- While one US company this week announced a new oil discovery offshore Equatorial Guinea this week, other oil companies announced an internal dispute that will delay the exploitation of at least two offshore wells. With last year's new Equatoguinean Hydrocarbons Law, the "crazy years" of sky-high revenues have come to an end.
The Houston-based oil company Noble Energy on Monday presented the best news the Equatoguinean oil-financed government has had lately. On Monday, it announced a new discovery on Block "I" offshore Equatorial Guinea. Well "I-1", which was testing the Benita prospect, "encountered an extremely high quality Miocene reservoir containing 41.5 meters of net hydrocarbon pay," Noble said in a statement.
Production tests from the "I-1" well yielded flow rates of 1,038 barrels per day of condensate and 34.3 million cubic feet per day of natural gas, or approximately 6,755 barrels of oil equivalent per day, according to Noble. Benita is located in 886 meters of water, approximately 40 kilometres east of Bioko Island and 21 kilometres south of the Belinda discovery.
Noble Chairman Charles Davidson said "Benita represents the first well ever drilled in Block I. While more drilling is needed to fully understand our resource potential in the area, we are encouraged by this new discovery and the potential commercial aspects of both blocks."
Also the Equatoguinean Minister of Mines, Industry and Energy, Atanasio Ela Ntugu Nsa, was thrilled by the news. "The government of Equatorial Guinea is delighted that another discovery has been made in the Equatorial Guinea part of the Douala Basin. The government believes that this new discovery further confirms the significant hydrocarbon potential of the Douala Basin and highlights the positive investment climate which currently exists within the Republic of Equatorial Guinea."
Minister Ntugu Nsa felt obliged to highlight "the positive investment climate" of his country as this increasingly has been questioned by investors. The hydrocarbon sector in Equatorial Guinea - one of the least democratic and transparent states in Africa - is still totally dominated by minor oil companies, mostly North American.
While these companies have made very high profits in the first "crazy years" of little regulation and transparency in Equatorial Guinea's oil boom, possibilities of making a scoop are now getting smaller. Dallas-based Pioneer Natural Resources - which now has redirected its main investments from Equatorial Guinea to Tunisia - is already complaining about the escalating costs of drilling following the "enactment last year of a new Hydrocarbons Law by the Republic of Equatorial Guinea."
The new Hydrocarbons Law already has contributed to the stalling of drilling operations on two promising offshore wells in the deep water Rio Muni Basin. According to Australia-based ROC Oil, the new legislation led to an ongoing dispute between Pioneer and other oil companies that has stalled operations on several wells on Block "H".
According to ROC Oil, Pioneer had quoted the new legislation and the "escalating costs of drilling" the H-2 (Aleta) well as reasons for not wishing to proceed with the drilling and divesting from the project. The other participants of the Block H Joint Venture - ROC Oil, Atlas Petroleum International and Osborne Resources - claim that Pioneer is not entitled to make this decision.
The dispute has now been referred to arbitration. "Pioneer wants to cut and run from its farm-in commitment and ROC doesn't believe that it is entitled to do that," commented ROC Oil's Chief Executive Officer, John Doran. Until the dispute is resolved, it is unlikely that the drilling of the Aleta-1 well will proceed.
Meanwhile, Pioneer is now concentrating its investments in Tunisia, where the Texan company three weeks ago was able to announce its fourth discovery on the Jenein Nord Block. Equatorial Guinea by now is not even mentioned in the company's list of "global activities" on its website despite the fact that the country was key to finance Pioneer's growth to a medium-sized oil company.
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