EXPLORATION

Oil Search continues in Yemen and North Africa

OIL Search will continue expanding its Yemen acreage, following a steady stream of oil discoveries and the opening of the Basement play, the company said yesterday. Its combined work program over the next three years includes eight wells and 550km of 2D seismic.

Oil Search continues in Yemen and North Africa

In addition to extensive work and success in the Nabrajah basin, Oil Search will gain exposure to the Basement and conventional plays in the Marib/Shabwah basin through new exploration blocks, the company said in a Merrill Lynch presentation.

Oil Search would use Blocks 3 and 7, which it operates with a 34% and 60% stake respectively, as part of its strategy in the Shabwah basin to acquire acreage containing untested Basement structures, the company said.

Up to 100 million barrels of potential oil reserves were indicated in the blocks, and OMV’s neighbouring Habban-1 discovery of a 750-metre oil column added weight to this expectation, according to Oil Search.

Subject to rig availability, the company hoped to start drilling Block 3 at the end of 2006.

Another lightly explored area Oil Search hopes to develop is Block 74, which the company will operate with a 34% interest.

With reserves potential between 20 and 50 million barrels, the block was close to existing infrastructure and comprised similar geology to Nabrajah Block 43, which tested at about 10,000 bopd.

Drilling in Block 15 has been delayed until March next year, following the non-availability of deepwater rigs. Oil Search estimated this prospect could contain more than 150 million barrels of oil.

Meanwhile, the company would review its operations in Block 35, after identifying several high-risk leads from the Al Ahkaf-1 well drilled late last year.

Even after 10 years of production, Oil Search was putting its Sunah Field Basement reserve estimates at between 60 and 200 million barrels. It said the S-4 well had produced over 30 million barrels alone.

The company said Block 10 in the Kharir field was producing about 30,000 bopd, with 80% of that amount coming from the Basement.

Australian companies working with Oil Search in Yemen include Voyager Enery in Block 7 (21.25%) and Block 35 (15%), and Adelphi Energy, also in Block 7 (8.5%). Now that Voyager is in the process of merging with Arc Energy, it seems likely its Yemen acreage will be vested in Adelphi, an Arc sister company.

Despite Oil Search saying Yemen was more attractive than neighbouring Middle East and North African countries, it is still pursuing exploration and production opportunities in the region.

It recently acquired a 30% stake in Block 18, Libya during the EPSA IV Bid round and also has a 49% operating interest in Egypt’s East Ras Qattara Block.

Oil Search said its criteria for investment included: proven petroleum systems, closeness to infrastructure, acceptable fiscal terms and near-term drilling opportunities.

It also believed the company had skills that it could apply in the Middle East and North Africa - the abilities to develop in-country expertise, and to work cooperatively with host governments and local communities in culturally sensitive and physically difficult environments.

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