The new Equatorial Guinea office will provide the necessary support infrastructure to enable PetroSA to continue the development and exploration of the 2,167 square kilometer Block Q oil exploration concession it acquired in November 2004.
PetroSA is a 45% partner in the venture with the National Oil Company of Equatorial Guinea holding 25%. Johannesburg-based Industrial Development Group (Pty) Ltd, which facilitated the transaction, has a 30% share.
PetroSA will be the concession's Technical Operator and the National Oil Company of Equatorial Guinea the Administrative Operator.
The terms of the Block Q Production Sharing Contract calls for an initial exploration period of three years. This is subdivided into a First Initial Exploration Sub-Period of one year, during which technical data was acquired and interpreted and a Second Initial Exploration Sub-Period of two years during which one exploration well will be drilled.
The contractual commitments for the First Initial Exploration Sub-Period have already been fulfilled and 3D seismic data has been acquired and interpreted and the most promising prospects identified. Additional studies will be conducted this year to minimize the risks associated with their development. Tenders have already been called for a Block Q deep water exploration well required in terms of the Second Initial Exploration Sub-Period and drilling is provisionally planned to start as soon as rigs are available.
Thus far PetroSA has spent US$ 15m on the development of Block Q, mostly on the purchase and interpretation of seismic data. The Block Q development budget for 2006 is estimated at US $67 million, of which the exploration well to be drilled will account for US$ 50m.
In addition, PetroSA has contributed US $400,000 towards social investment in the form of training and development of Equatorial Guineans and will contribute a further US $100,000 towards a feasibility study for the establishment of an Institute of Technology for Hydrocarbons in Equatorial Guinea.
Says PetroSA Chief Executive Officer, Sipho Mkhize:
"PetroSA already has assets in Africa in the form of producing oil fields and prospecting opportunities in Nigeria, Gabon and Sudan. But this is the first time we have been able to establish a physical presence in Africa outside of South Africa.
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