Gabon's 10th Licensing Round cancelled, blocks now available through direct negotiations
The Republic of Gabon has cancelled its 10th Licensing Round and will instead enter into direct negotiations with interested parties for the 42 deep and ultra deepwater blocks which were on offer.
In a translated speech at the 17th Africa Upstream Conference in Cape Town the Gabonese Minister of Mining, Oil and Hydrocarbons, Julien Nkoghe Bekale, outlined Gabon’s new oil and gas strategy. New legislation is being developed that will include environmental and safety criteria as well as provisions for state participation and increased local content. The legislation will also include adjustments to the tax system to incentivise ultra deepwater exploration.
The Minister confirmed that negotiations had not yet been initiated and would start once the new legislation is in place. "We reasonably estimate that by the end of the first quarter of 2011 we will be able to start negotiations,” the Minister is reported as saying. It is also understood that negotiations would no longer be limited to the 42 blocks originally due to be auctioned.
The 10th Round, which had already been delayed from May to October 2010, was to offer 42 offshore blocks covering approximately 118,000 square kilometres, with a focus on prospective deepwater pre-salt plays. However, in mid October it was announced that the Licensing Round had been postponed indefinitely citing the need for 'security and environmental guarantees' in response to the Deepwater Horizon disaster in the Gulf of Mexico. The Licensing Round had created considerable interest as it was seen as a rare opportunity to participate in a highly prospective yet under-explored region, with the deepwater pre-salt plays thought to be analogous to discoveries in Brazil.
In addition, to environmental concerns, the new legislation is in response to trade union demands for a limit on the number of foreign workers in Gabon’s oil sector. The Government agreed in October to a 10% cap on oil sector workers and a requirement for all executive posts to be held by Gabonese nationals. Legislation is expected to include a two year period to allow oil companies to adjust to the 10% limit and a six month period for the adjustment of executive positions.
In order to initiate negotiations, interested parties must first purchase data on the offered block and send a letter expressing interest to the Minister of Oil. In addition companies will be required to demonstrate the financial and technical capacity to explore in deepwater areas. Data is available from CCG Veritas who, working with the ministry, has acquired over 13,000 kilometres of new seismic as well as gravity data and seismic reprocessing covering the offered acreage.
Gabon blocks on offer through direct negotiations (blue shading). Source: PetroView®
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