The MOU covers the principal terms negotiated over the last 12 months with the Government for a Production Sharing Contract (PSC) over the Massawa Block, located solely within Eritrean territorial waters. Subject to the PSC being finalized over the next six months, the joint venture has exclusive rights to explore for hydrocarbons in the Massawa Block for up to 7 years.
The interests in the joint venture are Afrex Limited as operator with 40%; Pancontinental Oil & Gas with 30% and Hardman Resources with the remaining 30%.
The Massawa Block lies in a Tertiary aged salt basin of the southern Red Sea. To the north of the Massawa Block, in offshore Egypt, a large number of commercial oil and gas fields have been discovered over the past 20 years. Within the Massawa Block itself, surface oil seeps have been identified near the Dahlak Islands.
The exploration program in the Massawa Block will commence with re-mapping of the existing seismic data and seismic reprocessing (if necessary) followed by the acquisition of new seismic data. The joint venture will then consider inviting farminees to earn equity in the Block by drilling one or more exploration wells.
Hardman's Managing Director Ted Ellyard commented, "We have been investigating the potential of Offshore Eritrea with our Australian partners for a considerable time and we are pleased to have now finalized the license terms with the Government of Eritrea. The Massawa Block has indications of hydrocarbon potential from earlier exploration work and we believe it will benefit from the application of modern seismic evaluation techniques. The addition of offshore Eritrea to Hardman's international portfolio comes at a time when many of our other international frontier projects such as Guyanne are reaching the drilling stage. We look forward to working with the Eritrean government and progressing the project through a staged exploration program of seismic evaluation, new seismic acquisition and drilling."
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