eychelles to launch offshore licensing round in 2009

14 Jan 2009

The Seychelles is planning to launch an offshore licensing round in 2009. On offer will be around 70,000 sq kms of offshore acreage, according to the head of state-owned Seychelles Petroleum Company (SEPEC). Two private companies, Houston-based PetroQuest International and Dubai-based East African Exploration (EAX), have already signed separate production agreements, covering a combined 38,000 sq kms, which recent seismic data suggests holds large reserves of oil and natural gas, according to SEPEC. 'Further blocks will go on offer this year, totalling about 70,000 sq kms on the Seychelles plateau,' the company's chief executive officer Guy Adam told Reuters. 'Companies coming in will need to do more serious seismic work.'

The Seychelles - regarded as a relatively stable and prosperous nation even despite its current economic crisis - could offer an attractive alternative to some of Africa's more volatile oil-rich states. EAX, which last November signed a deal with the Seychelles to further exploration on 15,000 kms in three tranches, has said the Seychelles offshore hydrocarbon potential could run into billions of barrels of oil. Under the EAX production agreement, the Seychelles would receive a royalty of 5% of production, Adam told Reuters. 'The rest will be based on taxation. If a massive oilfield is struck, the company will pay an Added Petroleum Tax which will be on a graduated scale up to 97%,' said Adam.

SEPEC bought a 10% stake share in EAX's parent company, Black Marlin Energy, for $6 million last August. 'This gives us influence in decision-making and provides great revenue in the event of an oil strike,' said Adam, adding that the move entailed inevitable financial risk. 'It is never nice to lose money. However we haven't exposed ourselves to debt (to make this purchase),' he continued. Seypec believes the move will also allow it to benefit from other ventures outside the Seychelles, referring to EAX's projects in Tanzania, Madagascar and Kenya. Last year SEPEC generated $4 billion dollars in revenue, resulting in $16 million net profit, largely from its fleet of five tankers and from the re-exportation of petroleum products alone in 2008, Adam said.