Zenith Submits Offer For Largest Oilfield In Benin

Zenith Submits Offer For Largest Oilfield In Benin
Zenith Energy has presented an offer to Benin for the award of the operatorship of Block 1 containing the country's largest oilfield.

Energy company Zenith Energy has presented an offer to Benin for the award of an initial nine-year license to operate Block 1 containing the country’s largest oilfield.

Block-1 contains the Sèmè proven oilfield, with significant unexploited potential, having estimated recoverable reserves (P2) of 22-28 million barrels of oil and 428 billion cubic feet of natural gas.

It has produced a reported 22 million barrels of oil to date, with the last production having taken place in 1998. The rate of production was around 2,000 barrels of oil per day. Production facilities comprised of three platforms, the last being installed in 2014-2015.

According to Zenith Energy, the field has a historical recovery factor of 22 percent, leaving a significant margin for improvement of the recovery factor by utilizing modern completion techniques, horizontal drilling, and improved 3D seismic.

Also, 23 wells have been drilled in Block-1, with the last well having been drilled in 2009 by South Atlantic Petroleum. This well discovered oil, however, due to the low oil price of $30 at the time, was deemed uncommercial.

The field is in shallow water offshore with onshore facilities and a tank farm for processing of oil production. It was originally discovered in 1967 by Union Oil.

Zenith claims that the field has significant development and exploration potential in the emerging Syn-Rift play extending from neighboring Nigeria.

"We are delighted to have submitted this offer for what is an extremely exciting opportunity in Benin, representing the largest and most prospective oilfield in the country. Block-1 has significant untapped, independently assessed oil and gas reserves, a proven history of material oil production, and existing field infrastructure. These key qualities make it a potentially highly enriching addition to our portfolio and fully satisfy the key criteria defining our growth strategy.”

"Benin is a stable and attractive jurisdiction for foreign investment, and we look forward with great enthusiasm to working closely with the local authorities to ensure we achieve a fruitful and enduring partnership in the event our offer is accepted," Andrea Cattaneo, Chief Executive of Zenith, said.

The company has presented an offer that outlines certain investment commitments and terms to be negotiated as part of an award for an initial nine-year license.

The offer contains specific details surrounding how Zenith will restore and expand the productivity of Block-1. Specific geological attention will be directed towards developing the emerging Cretaceous Play along the West African coast, which has proven to be a highly prolific basin extending from Côte d'Ivoire, Ghana to the West, to the east in Nigeria, with the large Ogo oil and gas discovery, as well as producing in the Aje Field.

If the offer for Block-1 is accepted, Zenith will progress in completing a due diligence process and negotiate with the relevant Benin Ministry aimed at finalizing a draft for the production sharing agreement to be approved by the country.

Following potential acceptance of the offer, the company will look to use the existing infrastructure installed in 2015, where previous development was stalled due to the low oil price environment at the time, to rapidly restore commercial production in the current high oil price climate for the benefit of the citizens of the Republic of Benin and Zenith Energy shareholders.

It is worth noting that there have been attempts to revive domestic oil production in Benin in recent years following the previous involvement of various Western oil companies between 1984-1998. In late 2019, CNPC signed a construction and operation agreement with the Government of Benin for the construction of the Niger-Benin Crude Pipeline connecting the Agadem Rift Basin region in Niger to the Port Seme Terminal in the Republic of Benin. Construction of the pipeline is underway and is expected to be completed by the close of 2023.

To contact the author, email bojan.lepic@rigzone.com


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