New Frontiers: the buzz about oil in Morocco

The list of African countries that have discovered big new reserves in recent years is impressive, led by the giant natural gas finds of Mozambique. Another country that thinks it can at least become a more significant producer, if not necessarily a behemoth, is Morocco. In this week’s Oilgram News column “New Frontiers,” Tamsin Carlisle talks about the recent buzz about Morocco at a key industry gathering.

———————————-

One of the biggest surprises at this year’s North Africa Oil and Gas Summit was the level of buzz about Morocco, generally regarded as the region’s outstanding “have-not” country in terms of oil and gas.

For some years now, Morocco’s Office National des Hydrocarbures et des Mines (ONHYM), has been telling the world that its onshore and offshore areas are substantially underexplored and could contain significant oil and gas prospects. But for the most part, the industry has dismissed the message as wishful thinking.

To be sure, Morocco’s track record of petroleum discoveries has been less than inspiring, especially considering that its first exploration well was drilled—and the first discovery made—in 1919. Yet in 2010, oil production averaged a mere 210 b/d and gas output at only 4,800 mcf/d. has the private-sector partners it needs to turn its erstwhile pipe dreams into reality.

Undeterred, ONHYM senior geologist Silim Lahsini, told the November summit in Vienna that he believed Morocco now is in deepwater, off the country’s Atlantic coast. Some big-name exploration outfits have recently taken over operatorship of key license areas, in apparent agreement with the government body’s appraisal of oil and gas potential.

Those companies now include Anglo-Turkish Genel Energy, which has a 60% working interest in the Sidi Moussa block and in late November acquired 75% of the contiguous Mir Left block. It is also junior partner in the Juby Maritime block with 37.5%.

UK’s Cairn Energy is Juby’s operator, also with a 37.5% stake, and in August purchased 50% of the Foum Draa blocks from three smaller explorers.

A third big name player in international frontier exploration is Bermuda-registered Kosmos Energy, which is the operator of three offshore licenses acquired in 2011. It has a 100% working interest in the Tarhazoute block, 56.3% in Foum Assaka and 37.5% in Essaouira.

All three companies have previously proved their ability to find large oil accumulations in previously overlooked provinces.

———————————-

Genel , in tandem with Norway’s DNO International, was one of the first international companies to produce oil in Iraqi Kurdistan, where billions of barrels of oil and gas resources have been discovered in the past few years.

Since its 2011 merger with the Vallares, the investment vehicle of former BP CEO Tony Hayward, Genel, under Hayward’s leadership, has been instrumental in doubling combined proved and probable reserves at Kurdistan’s first two producing oil fields to more than 500,000 million barrels.

Having established sustainable cash flow, Hayward is now intent on broadening Genel’s geographic footprint, with Morocco’s Atlantic Margin shelf among his principal targets.

Cairn’s exploration breakthrough was in India, where a string of discoveries included the country’s largest oil field. But in 2011, it sold most of its stake in its Indian affiliate, partly to raise funds for what has to date been an unsuccessful drilling campaign offshore Greenland.

Cairn CEO Simon Thomson now hopes to repair the company’s somewhat battered reputation with discoveries on its more than 10,000 square km of acreage offshore Morocco. Thomson describes the region as “an under-explored frontier area with high prospectivity and attractive fiscal terms.”

Kosmos made its name offshore Ghana, where it discovered the giant Jubilee oilfield in 2007, setting off an exploration and development rush that three years later culminated in the country’s first oil production.

The company has recently picked up exploration licenses offshore both Morocco and its southern neighbor Mauritania, in the hope of proving up a major new oil province that could potentially extend all the way to Cote d’Ivoire.

“The region contains evidence of a working hydrocarbon system, with oil shows in prior onshore and offshore drilling, as well as good reservoir potential,” the company added.

Indeed, a large heavy oil deposit has already been confirmed at Juby at a field that an ExxonMobil predecessor discovered in 1969. Moreover, Genel has recently picked up additional acreage offshore Cote d’Ivoire and plans to drill its first exploration well in that country’s waters, as well as three exploration wells offshore Morocco, in 2014.

Hayward has described Morocco’s offshore as geologically analogous to Atlantic Canada’s Panuke field, which includes eastern Canada’s first oil-producing reservoir, Cohasset-Panuke, and the recently developed Deep Panuke gas field.

Apart from its geology, Morocco’s attraction to this trio of elite international oil exploration specialists include contract terms that require only 25% state participation, through ONHYM, and low royalties of 10% on oil production and 5% on gas.

Morocco, on the extreme western edge of the Middle East and North Africa region, has also largely escaped the Arab Spring political turmoil that has engulfed some of its North African neighbors.

As a new oil province, could Morocco turn out to be another Ghana, or an Atlantic Canada without icebergs? Only time will tell.–Tamsin Carlisle in Dubai


Share this:
Facebook Twitter Email

All blog comments are moderated before being published.

Comments

  1. yan at September 25, 2013 3:02 pm

    No oil in morocco. These companies try to bust their shares.

     

Your Comment