At the beginning of September an Irish oil company, Tullow Oil announced a major discovery in the deepwater Zaedyus exploration well, 150km off French Guyana. The company is arguing, from the geology, that a new hydrocarbons basin around French Guyana, Suriname and Guyana, will mirror the huge African offshore oilfields which stretch from Ghana to Cabinda.
It is far from clear how much oil the Zaedyus field holds. Tulow is in partnership with Shell and Total in exploring the field. Even oil prices fall back a bit, exploration is likely to continue in this area (known, technically, as east of the Demerara high on the Guyane Maritime licence).
The discovery (and the recent weakness of the oil price) is probably bad news for the companies looking for oil around the Falklands/las Malvinas. The remoteness of this area, despite the Santos Basin discoveries off Brazil, mean that work here is only likely to occur when easier to areas have dried up.
Besides Total and Shell, two small companies, Northern Petroleum and Wessex Exploration have a 2.5% stake in the Guyane Maritime licence which covers Zaedyus.
Other offshore areas under exploration are the Cuban zone of the deepwater Florida Straits between Cuba and Key West, where Repsol expects to have an exploration rig in place by the end of the year. And on 20 September the Falkland/Las Malvinas Islands’ company Argos Resources said that it would begin off-shore oil exploratory drilling in the North Falklands/Las Malvinas basin in late 2011 to early 2012. This announcement comes on the heels of plans by the British firm Rockhopper to invest a whopping US$2bn in the Falkland/Las Malvinas Islands with a view to bringing on stream the Sea Lion field (discovered in 2010), by 2016.
Argentina and the US are watching this separate activity with a mix of caution and envy. Both the US and Argentina have legal embargoes in place preventing domestic and locally-based foreign firms from doing business with their island neighbours. In the case of Cuba in particular, the US private sector is increasingly critical of this politically-driven stance.
Most oil majors have given up the quest, on the basis of feasibility, to produce oil from the Falklands/Las Malvinas Islands, despite recent innovations in deepwater oil extraction technology. Rockhopper said on 14 September that it aimed to pump about 120,000 barrels of oil per day (b/d) from the Sea Lion field by 2018, although local officials in the Falklands caution that the company first needs to secure financing for its ambitious plans. Rockhopper claims there are reserves of 350m barrels of recoverable oil (half what oil analysts say Zaedyus holds).
In 2012 it will be 30 years since the Falklands/Las Malvinas war, which began in April 1982 with an Argentine military invasion and ended in June of the same year after a British Task Force ousted the Argentines. Relations between the UK and Argentina have dipped under the Argentine governments led by President Nestór Kirchner (2003-2007) and his wife and successor Cristina Fernández (2007- ). Ironically, the former Argentine president Carlos Menem (1989-1999) had managed to reach an oil revenue sharing deal with the UK, but that deal was later scuppered by Nestór Kirchner, purely for domestic political reasons.
Cuba believes it could have up to 20bn barrels in offshore oil reserves. It currently produces about 60,000 barrels of oil per day from onshore wells and imports about 115,000 b/d from Venezuela, on favourable terms. The state oil company Cubapetróleo has gone into partnership with Repsol, along with the likes of Italy’s Eni, Norway’s Statoil, and state companies from Russia and China, with seven deepwater exploration wells planned by 2012’s end. Repsol circumvented the 10% limit on US technology set down under the US-Cuba embargo by purchasing an Italian made semi-submersible rig, which was built in China. The rig is en route to Cuba from Singapore and should be in place by mid December. The prospect of a Cuban offshore oil industry springing up 50 miles off the Florida coast has prompted an unusual alliance between US oil and infrastructure companies and US environmentalists, who argue that the US government should licence local firms to do business and transfer know-how and technology to their Cuban counterparts. The Cubans have already expressed an interest in US clean-up expertise in the wake of the US Gulf Coast oil spill in 2010.
Ecuador: On 19 September a New York federal appeals court removed a preliminary injunction on Ecuadorean plaintiffs pursuing the assets of the US oil firm Chevron outside of Ecuador. The ruling does not mark an end to this complex litigation battle, but it is a setback for Chevron in its efforts to prevent Ecuadorean plaintiffs, who are suing the company for environmental damages in Ecuador, from attacking its assets outside of Ecuador. Chevron no longer has assets in Ecuador. On 9 February 2011 an Ecuadorean judge ordered Chevron to pay US$18.2bn in clean up costs for environmental damages in the Amazon region, where Texaco, purchased in 2001 by Chevron, used to operate. Chevron is in the process of appealing against this ruling in Ecuador. Chevron has long argued that the judgement in Ecuador has been based on fraudulent evidence and the manipulation of the local judiciary.
On 26 September eight oil companies tendered for licences to operate five marginal oilfields in Amazonia. The companies will have to invest US$180m over the next three years to increase output by a total of 10,000 bpd. The companies will pay a royalty on each barrel produced, and the government hopes that the tender will produce US$750m revenues.
There is only competition for two fields. Three companies (Petrobell, Consorcio Okeme and Gozhanty-Consorcio Montecz) bid for the Armadillo field, which is close to the Yasuní national park; and two, Petroriva and Consorcio Interpec bid for Ocano-Peña Blanc. Otherwise there were only single bidders for the other three fields: Consorcio DGC Dygoil for Singue; Consorcio Río Verde for Chanangue; and Consorcio Marañón for Eno-Ron.
Armadillo was in production from 1995 to 1999, but was plugged when the price of oil collapsed.
Ecuador defines marginal oilfields as those where production is less than 5,000bpd or below 1% of national output.
- Petrobras, the Brazilian state oil company is suing Ecuador for compensation after Petrobas refused to accept the Ecuadorean government’s new terms in 2010. Petrobras wants US$300m but the Ecuadorean government is offering between US$180m and US$200m.
