The emirate’s two upstream oil and gas exploration and production (E&P) companies, RAK Petroleum and RAK Gas, have both been active in overseas exploration activities in recent years. RAK Petroleum maintains indirect investments across eight countries in the MENA region, while RAK Gas has expanded its international portfolio via new exploration in Malawi and Somaliland. Although falling global oil prices have dimmed near-term estimates, a growing and well-diversified international portfolio should allow each company to expand its reach and revenues, as well as create a critical revenue stream for the government as it continues to invest in domestic development.
Government-owned RAK Petroleum maintains an indirect interest in 22 blocks at various stages of exploration and development through its 40.45% stake in Norwegian E&P firm DNO ASA and a 33% stake in Foxtrot International, which was acquired in 2013. Foxtrot is active solely in Côte d’ Ivoire, while DNO holds interests across Yemen, Oman, the UAE, Somaliland and Iraq, in particular, the Kurdish Regional Government (KRG). Both of these companies have reported promising growth as a result of new discoveries in recent years. CÔTE D’IVOIRE OPERATIONS: Foxtrot operates and holds a 27.27% stake in Côte d’Ivoire’s offshore Block CI-27, which contains the two largest producing gas fields in the country, Foxtrot and Mahi. Gas production from the block averaged 142.6m standard cu feet per day in 2014, equivalent to 70% of the country’s total gas production, which is sold on the domestic market for power generation, and industrial and commercial use under fixed-price terms that averaged $5.87 per million British thermal units in 2014.
In March 2015 Foxtrot announced it had made a discovery in the block following drilling of the Marlin North-1 well and has announced plans to continue exploration within the block’s Marlin oil and gas fields. The firm is also planning to maintain its activity on the nearby Manta gas field. This is part of a four-year, $1bn expansion programme involving installation of a second production platform, with new well drilling commencing in July 2015. Expansion continues, and in 2014 the company acquired an offshore exploration licence for Block CI-502, adjacent to Block CI-27, and now operates and holds a 27.5% stake in the block.
RAK Gas also announced in December 2014 that it had been awarded a government contract from Malawi for oil and gas exploration in two of six blocks slated for production, Blocks 4 and 5. The company regards Block 4 as particularly promising, as it spans areas of high potential, including Phalombe, Thyolo, Mulanje, Chiradzulu, Machinga, Balaka, Blantyre and Mangochi. According to local media reports, early exploration will involve low-flying aerial surveillance at 80-150 metres above the ground, and upon locating promising reserves RAK Gas is planning to employ full-tensor gravity gradiometry as a method to extract resources. The group also announced that it will begin exploration of Somaliland’s blocks SL-9 and SL-12 in partnership with Ophir Energy. RAK Gas began 2D seismic surveys of the blocks in January 2014 and plans to extend the total area surveyed by 750 km, according to local media reports.
Meanwhile, DNO has shifted its strategy away from appraisal drilling, with the company focusing on expanding production at the Tawke field in the KRG. Bijan Mossavar-Rahmani, executive chairman of RAK Petroleum, chairman of Foxtrot International and executive chairman of DNO, has announced plans to focus on aligning spending with earnings in 2015, highlighting its KRG operations as the most promising revenue stream. DNO production reached record levels in 2014, rising 66% year-on-year (y-o-y) to 117,482 barrels of oil equivalent per day, with production at the Tawke field rising by some 131% y-o-y to reach 91,255 barrels per day.
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