Exploration plans flourish in Mozambique

Exploration action continues to heat up in Mozambique.

South Africa's Sasol Petroleum International (Pty.) Ltd. has formed an alliance with ARCO International Oil & Gas Co. Ltd. and Dubai's Zarara Petroleum Resources to explore Mozambique's Temane, Sofala, and M10 blocks.

Meanwhile, Scimitar Production International, Calgary, began drilling its first exploratory well, Bandua-1, on the Buzi-Divinhe block (OGJ June 16, 1997, p. 32; July 14, 1997, p. 74).

Sasol and Scimitar are undertaking other development activities in the area. Both companies are acting in cooperation with Mozambique's state oil company Empresa Nacional de Hidrocarbenetos de Mocambique (ENH).

BP also is considering exploration off Mozambique.

Sasol alliance

Sasol Group subsidiary Sasol Petroleum International has agreed to acquire a 47.62% interest in Temane, Sofala, and M10, which are held jointly with ARCO and Zarara Petroleum Resources. Remaining interests in the blocks will be ARCO 47.62% and Zarara 4.76%.

Sasol already has an interest in southern Mozambique's Mazenga block, held jointly with ENH (OGJ, June 9, 1997, p. 29).

Under terms of the agreement, all four blocks will be operated by ARCO, with Sasol taking over operatorship 3-6 years after first sale of gas or oil.

The partners will jointly evaluate the blocks in detail, then negotiate production-sharing agreements (PSAs) with the government of Mozambique.

The agreement is aligned with Sasol's strategy of partnering with experienced oil and gas companies elsewhere in Africa. Sasol has entered into similar agreements with Phillips Petroleum South Africa Ltd., Energy Africa Bredasdorp (Pty.) Ltd., and PanCanadian Petroleum (Africa) Ltd. in two blocks off Durban, South Africa (OGJ, May 19, 1997, p. 36).

"This is a further step in consolidating the Sasol Group's position in natural gas and oil in the southern African region," said Sasol.

Scimitar wildcat

Scimitar's Bandua-1 well is expected to reach its planned depth of 2,000 m by mid-September.

Multiple zones of gas and condensate-bearing Grudja sands are targeted.

Logging, casing, and testing will require as much as an additional month.

Scimitar is scheduled to start drilling its second wildcat, Garabega-1, near the end of September. Duration of that well will be similar to the first.

Construction of the Garabega-1 access road and drilling site are under way.

The two wells are designed to test the 3-million-acre Buzi-Divinhe block. Upon completion, Scimitar will hold a 75% interest in the block in partnership with Leopardus Resources Ltd. 25%.

Other activity

Last October, Scimitar Hydrocarbons Corp. signed a memorandum of understanding (MOU) with the government and ENH for Mozambique's Inhaminga block.

The MOU gives Scimitar exclusive rights to negotiate a PSA on the block (OGJ, June 16, 1997, p. 32).

The 16,300-sq-km block borders Buzi-Divinhe. The PSA would enable Scimitar to coordinate exploration, development, and marketing in the two blocks, thereby achieving economies of scale, says the company.

In addition to the activities of Sasol and Scimitar, BP is studying potential in the Zambeze block off southern Mozambique (OGJ, Oct. 7, 1996, p. 31).

Also under way in the country is development of Pande gas field by ENH and Sasol (OGJ, Oct. 23, 1995, p. 102; Apr. 25, 1994, p. 28).

Concurrent with exploratory activities, rapid economic growth in Mozambique is spurring development of the country's gas markets.

Scimitar recently granted South African mining house JCI Ltd. the right to purchase as much as 1.2 tcf of gas for 30 years (OGJ, July 14, 1997, p. 74).