- Crude oil price hits $68 on tighter supply
French oil giant, Total, was yesterday awarded an exclusive right by Nigeria and the Island of São Tomé and Principe, to begin exploration for oil in three blocks, 7, 8 and 11, located within the hydrocarbon-rich Joint Development Zone (JDZ) owned by both countries in the Gulf of Guinea.
The development coincided with the rise of crude oil price to a four-month high at $68 per barrel, boosted by tightened global supply and a monthly report of the Organisation of Petroleum Exporting Countries (OPEC), which built a case to extend production cuts beyond June.
The right to explore for oil in the JDZ blocks was formally granted to Total after negotiations were concluded and a Production Sharing Contract (PSC) signed by parties involved at a ceremony held in Abuja.
The JDZ is an area in the region of the Nigeria – São Tomé and Príncipe boundary region speculated to be rich in oil and gas reserves.
And, considering that neither country could have explored the resources in the zone without interfering with their maritime rights, they agreed in a treaty to create a Joint Development Authority (JDA) to develop the field and mutually benefit from its resources.
The JDZ with regards to this was signed in Abuja on February 21, 2001.
Speaking at the PSC signing ceremony, the Managing Director of Total Exploration and Production Nigeria (TEPN), Mr. Nicholas Terraz, stated that the oil company would invest more $10 million to acquire three-dimensional seismic data of oil and gas prospects in the blocks.
Terraz explained that it would be too early to estimate the hydrocarbon potentials of the blocks, adding that more than 1,000 squares kilometres of the field would be explored.
“This is for seismic acquisitions, and the investment is over $10 million. It is too early to tell the quantity of the oil. We have a four-year exploration period and during which we will need to acquire the seismic data. Total will be funding 100 per cent for the time being,” Terraz said.
Also, the Executive Director, Monitoring and Inspections at the JDA, Dr. Ibiwari Jack, stated that while the potential of the oil blocks were unknown, Total’s exploration of same would provide partners details of the hydrocarbon content of the blocks.
Ibiwari noted that the oil blocks assigned to Total had not been explored before, adding that the company would be the first to explore it.
“Having Total back to our JDZ gives us so much confidence. If others look back to see Total, they will want to come. The blocks they are into now, nobody has done any exploration there.
“They will go to do their seismic studies there and hopefully in the next one or two years, we will get to know the potential but the prospect is there, very huge,” Ibiwari said.
In his remarks, the Acting Chairman of the JDA, Dr. Almajiri Geidam, stated that the signing of the PSC with Total was aimed at reviving activities at the JDZ after years of idleness.
Geidam noted that the JDA intends to also revive interests on the JDZ among investors and oil companies.
He said: “Since the JDA was established in January 2002, it has held two licensing rounds which culminated into the award of six blocks in the JDZ. Some exploration activity took place in most of the blocks that resulted in some discoveries of hydrocarbons.
“Today’s event which is as a result of a careful re-engagement of the industry by the board aimed at reviving the fortunes of the JDZ requires us to commend Total for the renewed interest in the zone.
“Furthermore, this event is expected to elicit even more interest and confidence of other prospective investors as well as consolidate the existing cordial relationship between the Federal Republic of Nigeria and the Democratic Republic of Sao Tome and Principe.
“I wish to seize this opportunity to also reiterate the commitment of the board and staff of the JDA that we will work assiduously to ensure that the PSC signed today and indeed other existing PSCs are fully executed in accordance with the Abuja joint declaration on transparency and good governance signed by the two heads of state of the state parties,” Geidam, added.