Dead Sea Oil Exploration Hinged on Financial Guarantee
Oil firm Trans-Global will have two months to present a financial guarantee in order to maintain its hold on an oil concession in the Dead Sea area, Jordan's Natural Resources Authority (NRA) said on Tuesday.
According to a source at the NRA, US-based Trans-Global should submit a $2 million financial guarantee by the end of March to continue its oil exploration efforts. If it fails to submit the guarantee, its concession in the area will end, he indicated.
Representatives at Trans Global could not be reached.
The 1996 production sharing agreement signed between the NRA and Trans-Global, which was ratified by Parliament in 1997, gave the company the concession to explore an area in the southern Dead Sea in three phases over several years.
The agreement stipulates that if an actual oil discovery is made, the concession holder has the right to develop the area for 25 years.
If no discovery is made by the time the concession is over, it is reopened to new bidders.
The NRA and the US-based company entered into a dispute in 2005 when the firm claimed it made a "technical oil discovery", a claim that the government denied.
After extensive data-gathering of a well in the concession area by Porosity Ltd., which purchased 80 percent of the concession, it described the hydrocarbon potential in the eastern block of the area as "disappointing", the NRA announced previously.
Copyright (c) 2010, Jordan Times, Amman. Distributed by McClatchy-Tribune Information Services.