Falkland Islands spells out block offering details
What's On Offer Off Falkland Islands (40936 bytes)
The Falkland Islands has unveiled details of an offering of more than 44,000 sq km of virgin offshore territory for exploration.
The acreage is divided into 19 groups of 215-250 sq km, each covering six to 15 blocks. Twelve groups lie north of the islands, while seven lie south and southeast.
John Martin, administrator of the oil licensing team for the Falkland Islands government, told Oil & Gas Journal some companies have shown they are eager to acquire acreage.
Two groups are close to being signed up, Martin said. Licenses will be very close in pattern to U.K. continental shelf licenses, with similar requirements for work program commitments.
Deadline for bid submittal is July 1, 1996. Each group of acreage will require a separate application.
Martin said government expects to announce license awards in September 1996. This timing will give oil companies the southern summer in which to kick off initial exploration if they wish, he said.
Taxes, terms
Martin said the Falklands will operate a simple tax system, imposing a 9% royalty on production and a 32.5% corporate tax. This will be as benign as U.K. taxationor even more benign, he said.
Exploration and production licenses will carry a maximum 57 year term. This will involve three exploration periods amounting to a combined 22 years, along with a 35 year exploitation phase.
The first exploration phase will require seismic data acquisition, while the second will require drilling. A third exploration phase of as long as 10 years will allow further exploration and appraisal drilling.
Exploration north and south of the islands has involved two 2D seismic surveys, which Martin described as being at the reconnaissance level.
North and south of the islands is well structured, Martin said. Presence of structures in the area is not a problem, but there have been no wells in the area at all. From this data the presence of source rocks and reservoirs is not known. While the information we have gathered to date is encouraging, there is still a long way to go.
Water depth on the northern blocks reaches to about 250 m, while the southern blocks have depths of 500-2,000 m. Martin said all areas on offer can be explored and developed using present technologies.
A report prepared by the British Geological Survey says the Falklands chose block groups and locations to offer varieties of acreage in terms of geology, size, and water depth.
The Argentine issue
The British report says block applications will be welcome from companies and groups worldwide, although Argentine companies will not be awarded more than a 49% interest in any license nor will they be given an operatorship.
Martin said when U.K. and Argentina recently signed an agreement covering future exploration in the Area of Special Cooperation, southwest of the islands, Argentina also agreed not to impede exploration of areas offered in the licensing round.
Any revenue from the area of cooperation is to be shared between the Falklands and Argentina because the disputed area lies half in Falklands waters and half in Argentine territory.
Martin explained that opening of the area of cooperation to oil and gas exploration is an issue to be dealt with in the future.
The agreement between U.K. and Argentina said a joint commission will be formed to encourage exploration in the area of cooperation. To this end, the area will be split into as many as six areas, each covering 3,500 sq km. Copyright 1995 Oil & Gas Journal. All Rights Reserved.