Seeking to capitalise on higher oil prices, Sierra Leone has extended the deadline of a fourth oil licensing round for five deep water offshore blocks until September 27, officials told Reuters.
The five contract areas cover 31,653 square kilometres of deep and ultra-deep water off Sierra Leone’s coast. The original deadline was June 28.
Interest in West African oil and gas has surged over the last decade, with big discoveries in Senegal and Mauritania over the past few years.
But Sierra Leone, even after a boom in exploration in 2012, has yet to see discoveries of either in commercial quantities.
“We are still in the exploration phase, but all the right ingredients have been discovered here to suggest the existence of commercial quantities,” Raymond Kargbo, director general of Sierra Leone’s Petroleum Directorate, told Reuters this week.
“Guyana drilled more than 50 times before striking it big, and our geology is very similar to theirs.” he added. “Much of what we have remains unexplored.”
Sierra Leone suffered a 2014-2016 Ebola epidemic that killed thousands, during which time global oil prices plummeted from $110 to $40 per barrel. Within two years, all but one of the 11 companies awarded contracts in 2012 either relinquished their licenses or had them terminated for non-compliance.
President Julius Maada Bio, sworn in in April, came to power on a promise to clean up the extractive industries — centred around iron ore and diamonds — and revive the economy.
As oil prices once again rise, Sierra Leone hopes to ride the wave of interest that has seen projects launched across West Africa from Mauritania to Ivory Coast and Ghana.
Five of Sierra Leone’s eight offshore wells made small-scale oil and gas discoveries before they were abandoned during 2015 and 2016.
Kargbo said that Exxon Mobil has already pre-qualified as an operator, and that BP, Kosmos Energy , and 10 other companies visited Sierra Leone to evaluate existing data.
Sierra Leone’s previous licensing round in 2012 saw offshore blocks awarded to 11 companies including Chevron, Noble Energy, and Lukoil, all of which chose not to renew their initial licenses during the slump in oil prices.
Contracts with other companies were terminated for not meeting minimum activity standards over the same period.
Oslo-listed African Petroleum, founded by Australian-Romanian billionaire Frank Timis, and its subsidiary European Hydrocarbon currently hold the only two licensed offshore blocks in Sierra Leone.
Chevron, Exxon, African Petroleum and Lukoil did not respond to requests for comment. (Editing by Tim Cocks and Alexandra Hudson)
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