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Monday, April 19, 2021
Algerian state-owned hydrocarbons company Sonatrach announced in a press release on Thursday that it has terminated the contract with Petroceltic, a wholly-owned Sunny Hill subsidiary, for the exploration and exploitation of hydrocarbons on the Isarène license. Sunny Hill has promised legal action to the tune of $1 billion.
“On April 12, 2021, Sonatrach terminated the contract for the exploration and exploitation of hydrocarbons on the Isarène perimeter (blocks 228 and 229a), concluded on September 26, 2004 with the company Petroceltic International PLC, under l ‘aegis of Law No. 86-14 of August 19, 1986, amended and supplemented, relating to the activities of prospecting, research, exploitation and transportation by pipeline of hydrocarbons,” the statement read.
Sonatrach states that it “has exercised this right after having unsuccessfully asked Petroceltic to comply with its contractual obligations.” Petroceltic has been given a deadline to transfer oil operations to Sonatrach.
“Petroceltic, whose participation rate was around 75% when the contract was signed, significantly reduced its participation through two successive transfers of its rights and obligations formalized by amendments. At the date of termination, this rate was 38.25%,” the statement concluded.
Approved in 2012, the development plan for this perimeter provides for its commissioning in 2017 with a production level of 10 million m3 per day of gas, 17,000 barrels per day of LPG and 11.5 thousand barrels per day of condensate. Sonatrach states it intends to continue the development efforts of this project with the objective of bringing the resources into production in November 2022.
Sunny Hill, in response, has stated that it has invested hundreds of US$ millions in the project. Sonatrach has offered no compensation in relation to their seizure of the interest. Sunny Hill Energy disputes the validity of the contract termination and, having taken legal advice, intends to pursue all legal recourse to compensate it for the loss of its interest which Sunny Hill Energy values well in excess of $1 billion.
Angelo Moskov, the Chairman of Sunny Hill Energy said, “Sonatrach has acted in an aggressive and irrational manner. Their attempted expropriation of our interest without compensation is the type of action expected in Hugo Chavez’s Venezuela and not from a country like Algeria that proclaims to respect the rule of law. This unwarranted action will be highly damaging to the attempts by Algeria to attract foreign investment into the country.”
Moskov continued, “We have strong legal advice that this action by Sonatrach is without legal merit. We have fully met our contractual obligations including providing our full share of resources required for the operation of the joint venture with Sonatrach. We will robustly pursue our claims taking all actions to protect our interests. This will include making a claim for compensation from Sonatrach and/or the State of Algeria well in excess of US$1 billion.”
BW Energy Re-starts Dussafu License Drilling Campaign Offshore Gabon
BW Energy Limited announced the re-start of a three-well drilling campaign on the Dussafu license offshore Gabon consisting of two exploration wells in the Hibiscus area and one production well on the Tortue field. The Borr Norve jack-up rig has been contracted for the campaign.
The current campaign will start with the Hibiscus Extension appraisal well (DHIBM-2) which is located about 56 km from the coast in 119 m water depth. The well is planned as a vertical well to test the northern extension of the Gamba reservoir of the already discovered Hibiscus field. If the well is found to be hydrocarbon-bearing, one or two appraisal side-tracks may be drilled to further delineate the field.
The appraisal well will provide new input to the ongoing Hibiscus/Ruche development project, which is currently based on the already discovered 46.1 million barrels gross 2P reserve at Hibiscus and the 24.1 million barrels discovered at Ruche and Ruche North East. The development project is planned to consist of a converted jack-up rig tied back to the FPSO with 12 development wells drilled in two phases, with first oil expected in Q1 2023. The additional reserves at Hibiscus, if proven by DHIBM-2, may lead to relocation of the first converted jack-up and the potential deployment of a second converted jack-up to fully exploit the resources in this prolific area of Dussafu. The timing of the first oil from the area would not be affected.
“We are excited to begin the next phase of exploration drilling on the Hibiscus field. The Hibiscus Extension is our largest current prospect and has already been de-risked by the nearby discovery from 2019 and subsequent 3D seismic work. Working closely with the Government of Gabon and our license partners, we are looking forward to unlocking the full potential from Hibiscus and continue our development of the successful Tortue field through this drilling programme. The company expects to generate material cash flow over the next decade from the continued development of Dussafu and to deliver significant value to Gabon and the license partnership” says Carl K. Arnet, the CEO of BW Energy.
Following the DHIBM-2 well, the rig will move to drill the horizontal production well, DTM-7H, at the Tortue field. Once DTM-7H is completed and hooked up along with the previously drilled DTM-6H well, this will complete the phase 2 development of Tortue and will bring the total number of producing wells at Tortue to six wells.
The rig will subsequently move to drill the Hibiscus North prospect, located approximately 6 km north-northeast of the DHIBM-1 well. Hibiscus North is a separate prospect with estimated potential reserves of 10 to 40 million barrels of oil which could further enhance the resource base of the Hibiscus/Ruche area.
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