Petrobras enters into oil exploration deal with Tanzania

Jan 02, 2007 01:00 AM

A Brazilian international energy firm, Petroleo Brasileiro (Petrobras), has concluded an agreement with the Tanzania government to start deepwater exploration for oil within two years.
Joao Figuera, international executive manager for Petrobras, told in Dar es Salaam that the term for agreement for Block 6, which covers an area of 11,099 sq km, would be for 11 years divided into three periods. Block 6 is located in deep waters of between 500 and 3,500 meters in the Tanzanian sector of the Indian Ocean.

Mr Figuera said that in the first period of four years, Petrobras will undertake studies and survey geological, geochemical, and geophysical data, including 2,100 km of 2 dimensional seismic data or 300 sq km of 3 dimensional data.
"In the second and third periods of four and three years respectively, the company will drill wells which, if successful, will allow the production period to start. Its term will be 25 years renewable for an additional 20 years," he said.

Petrobras has been in Tanzania since June 2004 when it signed an agreement with the Tanzania Petroleum Development Corporation (TPDC), the national oil company. In the first agreement with Tanzania, the company provided for exploration of block 5 in Mafia Basin, over an area of 9,250 sq km in waters between 300 and 3,000 metres deep.
The executive manager of Petrobras, Raul Adalberto de Compos, said the company's goal is to consolidate its position in a sedimentary basin with the potential of becoming a new oil province and maintain a long-term performance in the country. Mr de Compos said the company also hopes to use operational synergies such as hiring geophysical data acquisition and processing services among others as required for future exploratory drilling.

Petrobras took part in and won the first round of bids opened by the Tanzanian government in 2001. The contract foresees four years of activity until June 2008, including seismic surveys, geological studies and assessment of the basin, and may extend for another two periods of exploration totalling seven years.
In May 2005, the company participated in the third round of bidding and won the concession for Block 6. The production share contract for the block was sealed in December, 2006.

Nazir Karamagi, Minister for Energy and Minerals, told that during the first four years of exploration, Petrobras will spend at least $ 6 mm to acquire geological, geophysical and geochemical data that includes 2,100 km of two dimensional seismic data or 300 sq km of three dimensional seismic data. Mr Karamagi said the Brazilian firm would also spend at least $ 20 mm for further exploration work that will include the drilling of a deep well.
"This firm will, during the time frame of 11 years, spend at least $ 46 mm for exploration activities with $ 44,306 as annual acreage license fee and $ 100,000 annually for human resource development," he said, adding that to attract risk capital was not an easy task, particularly in areas such as Tanzania, where no significant discoveries have been made.

Petrobras will incur all contract expenses related to exploration and appraisal operations. In case of oil discovery, it will recover all the agreement costs incurred from volume of crude oil saved and produced in the contract area and limited in any calendar year to an amount not exceeding 70 %.
The African continent is among the investment priorities set forth by Petrobras' plan. The company already has oil exploration and production activities in Angola, Nigeria, Equatorial Guinea, Tanzania, Mozambique, and Libya.

Source: The East African
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