PetroNor retains offshore Gambia license following arbitration

Sept. 22, 2020
PetroNor E&P and the government of The Gambia agreed to terms settling arbitration related to offshore licenses A1 and A4. PetroNor will regain the 1,376-sq km A4 license and sign a 30-year lease under new terms.

PetroNor E&P Ltd. and the government of The Gambia agreed to terms settling arbitration related to offshore licenses A1 and A4. Under the terms of the settlement, PetroNor will regain the 1,376-sq km A4 license and sign a 30-year lease under new terms. The company will relinquish any claims related to A1 license that has been subsequently awarded to a major oil company.

The terms of the new license are based on the newly developed Petroleum, Exploration and Production Licence Agreement PEPLA model. PetroNor will be able to carry the Prior Sunk cost associated with A4 into the new agreement for tax breaks and enhanced commercial model.

Eyas Alhomouz, chairman of PetroNor E&P Ltd., said: “This is undoubtedly a good outcome for all parties as it removes a lot of uncertainty and potential further cost exposure to what was a highly complex situation,” adding that the terms of the new agreement “are significantly more attractive and will enhance not only the value of the license but also its attractiveness to potential partners.”

Alhomouz said the company has 1 year to decide whether it wishes to proceed with the lease agreement, noting that the company expects to have seen drilling on the adjacent A1 license during the timeframe which could aid in commercial and technical decision making regarding next steps associated with the A4 license.

In March 2015, the company noted an assessment of prospective oil resources attributed to the A4 license as prepared by ERC Equipoise. The assessment, in conjunction with a 2017 management update, estimate the net unrisked mean prospective oil resources of A4 in excess of 1.5 billion bbl of oil.