THE Orinduik Block offshore Guyana contains an estimated three billion barrels of oil and gas, Eco Atlantic Oil and Gas disclosed on Tuesday. The report comes even as Eco Atlantic and its partner Tullow Oil prepare to drill for oil in 2019.
Eco Atlantic Oil & Gas holds a 40 per cent working interest in the Orinduik Block while Tullow Oil has 60 per cent. The Orinduik Block is located just 11km from and up-dip to ExxonMobil’s Liza Discoveries. In a resource study dubbed “Competent Persons Report for Certain Assets in Offshore Guyana” published on Tuesday, it was estimated that the Orinduik block contains a resource of around 2.9 billion barrels of oil and gas equivalent in 10 large prospects.
According to that report, the target reservoir rocks for the Orinduik Block are expected to be similar to the Cretaceous age reservoirs discovered on the neighbouring Stabroek Block by U.S Oil giant ExxonMobil at Liza, Payara, Pecora, Ranger, Hammerhead and Turbot.
“The Hammerhead discovery less than seven kilometres east of the Orinduik Block boundary has proven that the tertiary section has commercial accumulations of hydrocarbons in stratigraphic sand traps. This analogue is currently being evaluated by the ECO and the partners,” the report, which was prepared by Gustavson Associates LLC on behalf of ECO Atlantic, stated.
According to a Production Sharing Agreement (PSA) inked between the Guyana Government, Tullow Guyana B.V and its partner Eco Atlantic, Guyana could benefit from as much as 60 per cent in oil profit, including a one per cent royalty once the companies commence pumping for oil in the Orinduik Block.
Tullow Oil, parent company of Tullow Guyana B.V., is a leading independent oil and gas exploration and production company, which has interests in 90 exploration and production licences across 16 countries that are in West Africa, East Africa and ‘New Ventures’, which includes Guyana and French Guiana. Eco Atlantic Oil and Gas is a small, independent international oil and gas exploration company based in Toronto, Canada.
According to the Petroleum Contract, which was signed on January 14, 2016, and released by the Guyana Government earlier this year, once the recoverable costs have been satisfied, the profit will be shared between the government and the contractor for each field, based on an established system. This could see Guyana receiving a profit share as high as 60 per cent and as low as 50 per cent.
“The balance of crude oil and/ or natural gas available in any month after recoverable contract costs have been satisfied to the extent aforesaid (hereinafter referred to as “Profit Oil” and or “Profit Gas’ as the case may be) shall be shared between the government and the contractor for each field…,” Article 11:04 of the Petroleum Agreement states.
For the first 25,000 barrels of oil, Guyana is in line to receive a profit of 50 per cent. For the next 25,000 barrels, the country’s profit would increase to 52.5 per cent and 55 per cent for the next 15,000 barrels. For the subsequent batch of 15,000 barrels of oil, Guyana would benefit from a 57.5 per cent profit and 60 per cent profit for more than 80, 000 barrels of oil. The profit will be shared between the government and contractor on a monthly basis.
According to Article 15:06 of the Petroleum Agreement; a one per cent royalty is included in the government’s share of profit. “The government’s share of profit oil specified in Article 11 includes royalty payable by the contractor at the rate of one per cent of crude oil produced and sold, and delivery to the minister, pursuant to Article 14 of his share of profit oil equivalent to royalty shall constitute payment of such royalty in kind,” the agreement states.
The agreement also provides for associated gas produced from an oil field within the contract area to be used for the purposes of the operations of production and production enhancement of oil fields, such as gas injection, gas lifting and power generation.
3D seismic operations in the Orinduik Block were completed early September 2017, and according to the Natural Resources Ministry, processing and subsequent interpretation will follow with the possibility of drilling in 2019. The ECO Atlantic report comes at a time when ExxonMobil’s is estimated to have recoverable resource of more than 4 billion oil-equivalent barrels following a total of nine discoveries.