Australian oil company FAR Limited has been given more interest in licenses offshore Guinea-Bissau as well as an extension of the license periods.
Negotiations have concluded with the National oil company of Guinea-Bissau, Petroguin, to revise the terms of both the Sinapa and Esperanca licenses to which FAR has interests.
According to FAR’s statement on Tuesday, under the revised license terms negotiated by FAR and its joint venture partner Svenska Petroleum Exploration, FAR will now have a 21.42% participating and paying interest in the permits, an increase from the 15% participating and 21.42% paying interests as previously reported.
These changes reflect the fact that Petroguin will no longer be having a participating interest in the joint venture prior to a commercial discovery. Upon making a commercial discovery, Petroguin will have a reduced participating and paying interest of 10% and FAR and Svenska will respectively have interests of 19.28% and 70.71%, FAR explained.
In addition, the new license terms negotiated include more favorable arrangements for deep water investment including a reduction to production royalty rates payable to the government. These changes to license terms are consistent with the joint venture’s new strategy to focus on the shelf edge areas of the Sinapa and Esperanca licenses which display a similar geological setting to offshore Senegal and the SNE field discovery where FAR also has interest.
Extension & work obligation
In recognition of this new strategy and to provide adequate time to further evaluate the newly acquired 3D seismic data offshore Guinea-Bissau, the joint venture has been awarded a three-year extension to the current license periods, now ending on November 25, 2020. During these license periods the work obligation is to drill one exploration well on each license with a minimum expenditure commitment for each license of $3 million (gross). These changes in the terms of the licenses have been agreed and signed by Petroguin and remain subject to Government Decree, the company noted.
FAR Managing Director, Cath Norman, said: “The FAR and Svenska joint venture has previously mapped a 470 mmbbls prospect called Atum on the Guinea-Bissau shelf edge in a play similar to the large SNE discovery made by FAR and its Senegal partners in 2014.
“The changes in license terms give FAR a larger equity interest in Atum and the other prospects mapped to date in our Guinea-Bissau licenses and more importantly gives us an increased share and improved commercial terms in any deep-water discoveries that are made. These changes also give FAR greater options for funding exploration drilling in Guinea-Bissau in the future. It is testimony to the close working relationship that FAR and Svenska have with Petroguin, that these agreed license changes including the 3-year extensions, provide a strong basis to proceed with deep water exploration work program and investment.”
Recently, FAR signed an Area of Mutual Interest agreement with CNOOC UK Limited, which covers selected licenses offshore Senegal and The Gambia.