Sierra Leone opens up most of offshore to explorers
A new government has brought a new approach to licensing
Sierra Leone has taken the unusual step of opening up its entire offshore acreage to potential explorers. While it is being branded as a reopening of its fourth licensing round, it is actually more of a complete revamp.
The fourth round was originally launched back in early 2018, when five deep and ultra-deep-water blocks covering more than 31,000 km2 were offered. However, the process was complicated by the timing of the April 2018 presidential elections, which resulted in a win for the opposition candidate, Julius Maada Bio.
A rethink by the new government, plus industry interest in acreage beyond the original five licensing areas resulted in suspension of the original round and a new approach in a bid to win investment. Explorers are now invited apply for licences in any part of the country's offshore waters, barring environmentally protected estuaries and a 5km coastal fisheries zone.
Applicants can make bids for licence areas of their own choosing based on combinations of delineated blocks, each of 1,360km2.
"Any overlapping licence applications will be reviewed with reference to their relative merits", and against criteria detailed on a published scorecard, the Petroleum Directorate of Sierra Leone (PDSL), said in a statement.
The process includes two types of tender, a "direct tender" for licence applications where 50pc or more of the application area is in water over 2,500 metres deep, and an "open tender" for all other licence applications-those in relatively shallow water. PDSL said the division reflected the fact that fewer companies would have the financial and technical capability to operate safely in ultra-deep-water areas, making a direct tender more appropriate for these.
The tender process was formally launched on 21 May and will run for six months for open tenders and four months for direct tenders. Licences awarded by direct tender could be awarded before the closing date.
Applicants need to propose a work programme for an initial exploration period, following which they will have the option to enter an extension period. No minimum work programme specifications have been set for the initial period, but the directorate said it expected companies to "invest in studies, data and other activities that build toward the drilling of exploration wells".
Playing catch up
Sierra Leone has lagged some of its west African neighbours in attracting international oil companies (IOCs) to its offshore, where there are currently no operators. However, PDSL is hoping that evidence of a working hydrocarbons system, plus the improvement in the oil price will be enough to entice the IOCs this time.
"We are confident that the flexibility delivered by this innovative flexible block framework will foster a new dynamism in oil and gas exploration in the region," Timothy Kabba, PDSL's director general said in the statement.
PDSL is supporting PDSL in organising the round, by Getech, the UK-based advisory and geophysical data firm.
"Across Sierra Leone's 150,000km2 of offshore waters, eight exploratory wells have been drilled. All have penetrated significant thicknesses of normally pressured reservoir quality sandstones. Five have encountered hydrocarbons and four have produced oil to the surface. Although none of the eight exploratory wells were deemed commercially viable, the results prove the existence of a working hydrocarbon system," Getech said.
The company said 29,000 km of 2D seismic data was available, including the results of multi-client programmes of 2001 and 2013 run by TGS and legacy data acquired by Mobil. More than 11,000 km2 of 3D seismic data is also available.
A series of political and developmental setbacks have hampered Sierra Leone's development, including a decade-long civil war, which started in 1991 and ended a decade later, and an Ebola epidemic in 2014. However, the former British colony has held a series of peaceful presidential elections the last 12 years and the economy is now recovering from the impact of the Ebola outbreak, albeit from a very low base.