Oil and Gas
Anadarko on Sierra Leone: “The
potential that we see there is the same as what we saw in Ghana
pre-drill. The Venus prospect we have in Sierra Leone… is a look alike
to what Jubilee was pre-drill. So we're very excited about the
opportunity there.” Bob Daniels, SVP - Anadarko
Oil and gas
exploration activities started again in 2003 in Sierra Leone, when TGS
NOPEC was engaged by the Government of Sierra Leone to carry out. TGS-NOPEC
Geophysical Company acquired approximately 5,800 sq km of 2-D seismic
data in 2000 and 2001 and 3,200 sq.km of 3D data in subsequent years.
The data set consists of a total of 170 lines extending from the
continental shelf to water depths of 2500 m to 4000 m, recording high
quality, 10-second migrated seismic data. The southwest-northeast dip
lines have an average spacing of 7 km and lengths of 50 km to 140 km.
Five composite, northwest-southeast strike lines are each approximately
850 km long. Approximately 5,800 line-km of the seismic data were
acquired in the offshore area of Sierra Leone.
Also see the Standard Application for Submission of bids for entering into Petroleum Agreements and Model Petroleum Agreement
Oil and Gas Sector Overview
Sierra Leone has historically gone through 3 phases of oil exploration; the first two stages involved drilling by
Mobil in 1982 and by Amoco in 1985, to depths of approximately 3000
meters These exploratory wells, located close to the border with
Liberia, are on the continental shelf, considerably shoreward of the
deepwater basin complex. Oil shows were encountered in both exploration drillings, but these wells were plugged and abandoned.
Sierra Leone Offshore Play Concept
Source: National Petroleum Directorate
Oil and gas
exploration activities started again in 2003 in Sierra Leone, when TGS
NOPEC was engaged by the Government of Sierra Leone to carry out. TGS-NOPEC
Geophysical Company acquired approximately 5,800 sq km of 2-D seismic
data in 2000 and 2001 and 3,200 sq.km of 3D data in subsequent years.
The data set consists of a total of 170 lines extending from the
continental shelf to water depths of 2500 m to 4000 m, recording high
quality, 10-second migrated seismic data. The southwest-northeast dip
lines have an average spacing of 7 km and lengths of 50 km to 140 km.
Five composite, northwest-southeast strike lines are each approximately
850 km long. Approximately 5,800 line-km of the seismic data were
acquired in the offshore area of Sierra Leone.
Source: National Petroleum Directorate
Oil Block Awards and Exploration Activities updates on progress in exploration.Also include new entrants if any
The
first round of oil block awards was in 2003/2004, when 6 Petroleum
Blocks. A number of companies carried out additional exploratory
activities. The consortium comprising Anardarko, Repsol and Tullow Oil
acquired 3D seismic data and progressed to drill 2 wells up to 18,000ft
in 9,500ft of water between 2005 and 2010. One of the wells, the Venus
B-1 provided 45 net feet of hydrocarbon pay, therein proving a working
petroleum system. The group also encountered 135 net fet of hydrocarbon
pay in the Mercury well, which is currently being appraised. Three more
groups, Lukoil, Talisman and African Petroleum have acquired 3D seismic
data, which are being interpreted and evaluated. Until 2012, the main
actors in the petroleum sector were: (i) Anardaro/Repsol/Tullow Oil;
(ii) Talisman/Prontina; (iii) Lukoil/Oranto; (iv) Young Energy Prize;
and (v) African Petroleum
Source: National Petroleum Directorate
In
August 2012 a new round of Oil Block Tender was completed, which saw
the award of 9 more Petroleum Blocks to a range of companies. This
process involved a total of 59 applications, and the results of the
process are summarised as follows.
Block No.
|
No. of Applications
|
Groups Awarded
|
SL 4A-10
|
16
|
African Petroleum; KOSMOS Energy
|
SL 7A-10
|
12
|
Elinilto Ltd; Signet Petroelum; Miexco
|
SL 7C-10
|
4
|
Maters Energy
|
SL 8A-10
|
13
|
Chevron Sahara; Noble Energy; ODYE
|
SL 8B-10
|
10
|
Chevron Sahara; Noble Energy; ODYE
|
SL9A-10
|
2
|
GNBH Exploration
|
SL 9B-10
|
1
|
GNBH Exploration
|
SL 10B-10
|
1
|
Varada Petroleum and Hydrocarbons
|
SL 10A-10
|
0
|
Source: National Petroleum Directorate
General Fiscal Regime of the Petroleum Industry
The
Fiscal Regime of the oil and gas sector comprises three key
instruments; (i) Royalty; (ii) Income Tax; and (iii) Petroleum Resource
Rent Tax (PRRT). These, together with other complementing provisions,
form the overall fiscal regime for Sierra Leone’s hydrocarbon industry.
The following are specific rules that apply:
Type of Agreement
|
Hybrid Royalty-Tax Agreement
|
|
Corporate Income Tax
|
30%
|
|
Exploration Period
|
Seven
(7) years consisting an initial exploration period of 3 years with
two (2) extension periods contingent on fulfillment of Work and
Financial Obligations of each of the two (2) renewal periods
|
|
Work Programme
|
Negotiable, based on minimum expenditure
|
|
Relinquishment
|
Licensee
cannot retain more than 50% of licensed area after the initial
exploration period and no more than 25% after the first extension
period
|
|
Royalties (Oil)
|
Water depths up to 200 metres
|
10.0%
|
Water depths over 200 metres
|
8.0%
|
|
Royalties (Gas)
|
Water depths up to 200 metres
|
5.0%
|
Water depths over 200 metres
|
3.0%
|
|
Surface Rental
|
Initial Exploration Period
|
US $40 per sq. Km. per Annum
|
1st Extension Period
|
US $60 per sq. km. per annum
|
|
2nd Extension Period
|
US $85 per sq. km. per annum
|
|
Development and Production
|
US $110 per sq. km. per annum
|
|
The Petroleum Act 2011
Downstream Investment Opportunities
The
country now has proven oil and gas deposits and production activities
are imminent. In addition to exploration, development and production of
crude oil, Sierra Leone also offers opportunities for downstream
investments in the sector. With GDP growth rates
averaging between 6% and 7% in recent years, this growth is fuelled by
economic activities that depend on petroleum products. Diesel and petrol
are the country’s largest imports; and imports of these products have
grown at approximately 20% annually over last 5 years. The regional West
African demand should be able to support a refinery with capacity
>200,000 barrels per day with additional export opportunities to
supply US & European markets.
Oil and Gas Port Infrastructure
The presence of vast
undeveloped lands close to sheltered deep-waters and natural harbours in
various points along the coast, create opportunities for oil and gas
port infrastructure and services for imminent production activities
Oil Refinery
The Government is seeking
strategic private sector partnership for rehabilitation and expansion of
the Sierra Leone Petroleum Refining Company (SLPRC) assets. The
company, originally created in 1970 as a JV between the GoSL and major
international oil companies, was forced to close down ten years ago. The
investments should improve on the operating infrastructure, to include a
specialised jetty and the installation of modern and more efficient
machinery and equipment. Government’s preference is for a strategic
partner with extensive experience in operations and management.
Marketing and Distribution
The expansion in the production capacity of crude
and refined oil creates even wider opportunities for marketing and
distribution of the products both locally and in international markets.
The Oil & Gas Sector is regulated by the Petroleum Exploration and Production Act 2001Also see the Standard Application for Submission of bids for entering into Petroleum Agreements and Model Petroleum Agreement
