Carnarvon signs Buffalo PSC with East Timor

Carnarvon Petroleum Ltd., Perth, has signed a production-sharing contract with the East Timor authorities that confirms an ongoing title to Buffalo oil field and the surrounding exploration acreage in the western Timor Sea.

The field now lies within East Timor’s jurisdiction following the exchange of diplomatic notes by the governments of Australia and East Timor on Aug. 30 that confirm ratification of the new Maritime Boundary Treaty (MBT). This brought into force the revised maritime boundaries between the two countries.

One of the conditions of the MBT is that affected parties, like Carnarvon, have been granted security of title in East Timor with conditions equivalent to those previously in place under Australian domestic law.

Carnarvon says the signing of the PSC (known as the TL-SO-T19-14 PSC) provides clarity on the way forward for its planned redevelopment of Buffalo field. The PSC has a similar net-back after government taxes and duties when compared with Australia’s offshore Petroleum Resource Rent Tax (PRRT) regime, along with clarity regarding approvals necessary to drill and produce oil in East Timor.

The transition also included recognition for previous work undertaken when the field was wholly in Australian permit WA-523-P. This includes approval for the environmental plan to drill three wells in the Buffalo field given by Australia’s offshore authorities in March.

In addition, work commenced prior to ratification for the well planning for the first well is allowed as cost recovery under the East Timor regime.

Carnarvon was awarded the original WA-523-P, which contained Buffalo field, in May 2016. The field was first discovered by BHP in 1996 and subsequently developed via four wells drilled from a small unmanned wellhead platform in 25 m of water and tied back to a floating production, storage, and offloading vessel. Production began in December 1999 and terminated in November 2004 after production of 20.5 million bbl of light oil from the Jurassic-age Elang formation reservoir. All facilities were decommissioned and removed prior to Carnarvon being awarded the permit.

Carnarvon ran a 3D seismic survey and determined that substantial volumes of attic oil remained in the structure. Independent studies provided estimates for remaining contingent 2C resources of 31.1 million bbl. Estimates of 1C resources were put at 15.3 million bbl and 3C at 47.8 million bbl.

Carnarvon said there is a range of options for Buffalo redevelopment which is deemed to be economic at current oil prices, even with the 1C resource volume. The company has declared the redevelopment low risk and is keen to advance the project.

Carnarvon holds 100% of WA-523-P and TL-SO-T19-14. The company has established an office in East Timor’s capital of Dili.