TUNISIA - The E&P Regime.
Under the law, the tax rate has been reduced from 75 to 50%. The royalty is 10% for oil and 8% for gas. ETAP takes equity in every E&P venture. The law authorises ETAP to set gas purchase prices at levels acceptable to the E&P operators. Oil prices are set by mutual agreement between ETAP and the operators.
The law grants the gas E&P company the option of having a concession for an IPP related to its gas production. STEG is authorised by the same law to negotiate the power purchase price with both ETAP and the operator. The same goes for Steg's purchase of natural gas from local operators. On the basis of the agreed price formula the operator can have an IPP in line with STEG's plans for the expansion of the power sector.
In addition, the new law gives ETAP greater flexibility in negotiating PSAs for oil and gas and for both new exploration blocks and known petroleum reserves. But E&P companies already operating in Tunisia and preferring to have their pre-2000 PSA terms unchanged have been allowed to maintain them.
The pre-2000 regime was based on a law No. 90-55 issued on June 12, 1990 which replaced all previous legislations regarding the petroleum sector. This remains in force for those operators who prefer it.
BG, the biggest foreign investor in Tunisia, was the main company to benefit from the new law. As soon as the law was initially approved in late July 1999, the UK major began preparations to develop the giant Hasdrubal gas field, which is to become part of its offshore gas production system.
Other than those already in Tunisia, however, the law has only attracted small companies. One of these is Athanor Resources, a little known US company, which bought the stake of the Hungarian firm MOL in the Kebili exploration block and the Sabria production licence.
Tunisia first became a target for oil exploration in 1894, when the French colonial authorities granted the licences. But it was only in 1909 that the first well was drilled by a French company.
The first oil discovery was made in 1964 by Agip at el-Borma, in the extreme south near the Algerian border. The field, in the TAGI sand of the prolific Ghadames Basin, was developed and put on stream in 1965 by Societe Italo-Tunisienne d'Exploitation Petroliere (Sitep), owned jointly by Agip and the Tunisian government. Since then there have been many oil finds but they are all small.
The second discovery was made in 1966 at Douleb, about 190 km north of el-Borma, but it was small. Ashtart was found in 1971 by Elf in an offshore area and came on stream in December 1973. But both el-Borma and Ashtart are in steady decline. Newer discoveries now are the main oil producers in Tunisia (see Part 2).
In late February 2006, ETAP signed up partners for two prospection permits and an exploration permit as part of its drive to accelerate the development of its upstream sector. A consortium of ETAP and Rigo Oil, an Italian unit of Canadian firm Cygam Energy, then signed a four-year permit to explore the 1,616 sq km Bazma block near the Tozeur-Kebili area in the centre of Tunisia. Rigo was to invest a minimum of $3.5m for a programme including the drilling of one exploration well and reprocessing and interpretation of existing seismic data.
Rigo Oil on July 6, 2007, was granted an oil exploration permit in Sud-Tozeur, covering 4,380 sq km and stretching over the governorates of Tozeur and Kebili. The initial four-year plan called for drilling an exploration well and spending at last $8m. The Tozeur-Kebili oasis area boasts one of the largest and most beautiful parts of Tunisia as well as an outstanding tourist infrastructure.
By then Rigo had increased its interest in the Jorf Permit from 37.5% to 100% by buying the stake and operating rights of Pioneer Natural Resources, with ETAP having an option of getting up to 50%. That permit was granted on Feb. 6, 1998 for an initial term of six years which was later extended for another two and half years. Rigo got an extension of the permit for one year to Aug. 6, 2008 to finalise exploration plans and secure a drilling rig.
Jorf, in east-central Tunisia, covers 4,003 sq km. Its eastern end is within 50 km of the Gulf of Gabes and major oil and gas pipelines traverse the permit. A very thick Permian reef sequence covers most of the permit. More seismic data acquired to confirm this indicated potential total reef thickness, from lower Permian to upper Permian, of about 3,000 metres - the main targets for exploration. Although a few wells were drilled to the top of the Permian, none was located in the proper reef facies in the central portion of Jorf. The lower Permian has never been penetrated and may hold the greatest potential for hydrocarbon accumulations. The diagram depicts the current interpretation of upper Permian paleogeography. A very important control point is represented by the KLF-1 well, along the southern end of Jorf, where several oil shows in back reef and lagoonal facies established the presence of hydrocarbons in the Permian sequence. Two additional control points corroborating the reef build-up theory along the east side of the permit are represented by the Tebaga outcrops, where two upper Permian reef units 190 metres thick are exposed at surface, and by the KJD-1 well which encountered 1,400 metres of unequivocal reef facies with excellent porosity.
Currently there are only two known producing Permian reef basins on Earth, one in west Texas and the other in Kazakhstan. The Jorf reef basin has strong similarities with the offshore giant Kashagan oilfield in Kazakhstan. A second objective in the north-western portion of Jorf has a Triassic Tagi sandstone. Rigo is reprocessing and re-interpreting all existing seismic data obtained from ETAP and previous operators to finalise the best drilling location to test upper and lower Permian targets.
Rigo on March 28 announced the start of drilling of the TT-2 exploratory well on the Sud Remada permit operated by Storm Ventures. The TT-2 well is being drilled on a large Ordovician structure, with indicated aerial extent of about 70 sq km, which was mapped on the basis of older vintage seismic coverage and new 2-D seismic data acquired in mid-2007. The well will be drilled about 1 km from an older well (TT-1), drilled in 1959, which recovered light oil and gas on limited tests. New 2D seismic data indicate the TT-2 location should encounter the target Ordovician Bir Ben Tartar sandstones 15 to 20 metres higher than in the TT-1 well. Drilling and testing operations in this 1,600 metre well was to last about 30 days. The Sud Remada permit covers an area of 1,173,215 acres and has exploratory potential in the Ordovician, Silurian Acacus and Triassic Ras Hamia Fms. All three zones have commercial production in adjoining blocks in Tunisia and Libya. The 2D seismic programme conducted over the Block during 2007 has delineated additional prospective structures which are under review for future drilling. Rigo has a 14% working interest in the TT-2 well and the Sud Remada permit.
Cooper Energy in October 2007 got 35% of the Hammamet EPSA in the Gulf of Hammamet. The block has attractive prospects and the abandoned Tazerka oilfield, which has the potential to provide an appraisal and redevelopment opportunity. Cooper already owns 100% of the adjacent Bargou permit and the farm-in gave the firm a strategic footprint in this petroleum province. The first well on the EPSA was expected to cost $15-25m, depending on the prospect selected, the water depth at the prospect, the day-rate on the rig selected to drill and the final well design. The Hammamet EPSA was until then 100% owned and operated by Storm Ventures of Canada. Storm operates three permits in Tunisia and will remain the operator of the Hammamet EPSA. During 2007 Storm acquired 402 km[sup.2] of 3D and 240 km of 2D seismic over the exploration prospects and the Tazerka field with a view to identifying the first target for drilling. The JV is to drill a well during 2008. Tazerka was the focus of production from an FPSO in the 1990s. It had an original oil in place of 78m barrels (P50) and produced 21m barrels until the field was abandoned in 1998 in a low oil price environment. Seismic data indicate there could be several blocks adjacent to Tazerka which may contain hydrocarbons.
In 2007 Cooper acquired 973 km of 2D seismic in the Bargou permit and is preparing a detailed prospects and leads map of Bargou. Cooper in late 2007 was to seek converting the Bargou permit into a five-year exploration right, during which it will commit to shoot further seismic and drill a well. The combined Bargou and Hammamet work programmes are expected to provide two high impact exploration wells in offshore Tunisia during 2008-2010.
American Technologies Inc (ATI) in September 2007 got the Ayacha and Ksar Ghilane oil and gas blocks for exploration and development. Technical information for these blocks were based on data from Exxon/Mobil which had already done extensive work in that region.
A JV of Circle Oil and Exxoil Tunisie on Aug. 20, 2007 began drilling on the Zita prospect in the Ras Mamour permit in the south. The well was targeting the two main reservoirs, including the fractured dolomites of the Cenomanian Zebbag Fm which form the main reservoir of the nearby Ezzaouia oilfield and the Upper Jurassic sands of the M'rabtine Fm, which are productive in the Ezzaouia field. That marked the start of an 18-month series of its field-based operations in North Africa and the Middle East. It was to drill three wells in Tunisia. Circle Oil in April 2007 had signed agreements with Exxoil Tunisie which allow it to farm into two concessions in Tunisia, including the Grombalia permit in northern Tunisia which give Circle a 36% working interest with the operator Exxoil Tunisie and ETAP as partners. The work programme included acquiring a small amount of 2-D seismic in late spring 2007 and the drilling of two mature prospects in the fourth quarter of 2007 and first quarter of 2008.
Two offshore prospecting licences in the north were in 2005 awarded to a consortium of ETAP, Anadarko Petroleum of the US and PetroCanada. The first two-year right covered the 7,648 sq km Bechateur field in which the operator Anadarko was to invest at least $2.84m. The minimum work programme included acquisition and processing of 1,000 km of 2D seismic and reprocessing and interpretation of existing seismic data. The consortium was given a two-year prospecting permit for the 7,476 sq km Cap Serrat field. Anadarko was to invest a minimum of $1.17m to reprocess and interpret existing seismic data and acquire 500 km of 2D seismic. ETAP was to have a 50% interest in both permits, with Anadarko holding 33.333% and PetroCanada having the remaining 16.666%.
Having added two tracts to its list of available acreage, ETAP in October 2005 offered 15 blocks for bidding. Two new blocks were the Ksour Essaf (E4) in the offshore Pelagian Basin and Zaafarane (S4) which corresponded to the previous Ma'toug block. The Mahdia offshore block was reduced to 3,524 sq km. The open blocks were in various geological domains including explored areas with proven hydrocarbon potential and prospective areas still under-explored. Data were made available on blocks including seismic lines, airmag and gravity surveys, geological data, well reports and studies.
First African Petroleum Consortium (FAPCO) in October 2005 got rights to explore the onshore Fawar and Mezzouna oil and gas fields in the central region. The five-year contracts, with an optional renewal for a further three years, called for one well at each field, and spending of $12m. Fawar in Kebili covers 3,032 sq km. Mezzouna, in Sidi Bouzid and Kairouan, cover 4,508 sq km.
Medoil, a UK-listed firm operating in the Mediterranean, in May 2005 got an EPSA on the offshore el-Louza block. The contract was won in conjunction with TGS-NOPEC of Norway, which held 5% but was to cover a larger share of the costs. The two-year contract gave the group exclusive rights to enter into a seven-year exploration permit and 30-year EPSA. TGS-NOPEC was the operator in the prospecting phase. There was an existing oil find on the 4,100 sq km permit. Four other undrilled prospects are near the discovery well, each said to hold 40-50m barrels of oil. The JV in late 2005 began 600 sq km of 3D seismic over the find and the other four prospects.
PT Medco Energi Int'l of Indonesia in June 2007 acquired Anadarko's 40% in the Anaguid Block worth $10m. Medco Director Rashid I Mangunkusumo told the Jakarta Stock Exchange Anadarko, which previously had 55% in the Anaguid Block, had sold the remaining 15% to Pioneer Natural Resources. The latter already had a 45% in the Anaguid Block. Through the acquisitions, Medco Tunisia was to hold 40% and Pioneer 60% in Anaguid. Pioneer was thus named operator of the block.
Nexus Energy of Australia in March 2008 took 33.3% in an area being studied for possible oil or gas finds. Perth-based AuDAX (operator) and fellow Australian firm Kairiki Energy each holds 33.3% in the venture. The three parties entered into an area of mutual interest (AMI) agreement to acquire onshore and offshore tracts in Tunisia. The AMI includes a one-third share from each of the three partners. The JV will focus primarily on buying interests in oil blocks either through farm-in deals for participation in releases of new exploration permits. The revised AMI agreement does not cover the onshore Chorbane permit Kairki and Audax acquired in November 2007.
PetroVietnam and ETAP in February 2008 signed JV agreement to exploit crude oil and gas in Tunisia. Taking part in the signing of the accord were affiliates of state-owned of PetroVietnam - PVEP and Vietsopetro - the latter is a JV of Viet Nam and Russia. The consortium will explore and exploit oil and gas in two Gulf of Gabes blocks - Tanit (2,436 sq km) and Guellala (1,540 sq km).
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|Publication:||APS Review Gas Market Trends|
|Date:||Mar 31, 2008|
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