OBG talks to Nicholas Cooper, Executive Director & CEO, OPHIR Energy

Nicholas Cooper, Executive Director & CEO, OPHIR Energy

Interview: Nicholas Cooper

What is the potential in deepwater offshore blocks?

NICHOLAS COOPER: Gabon remains an underexplored, attractive margin that displays all the characteristics of multiple working petroleum systems. Our understanding of these distal margins is ever evolving as new well information and high-quality seismic data become available. Multiple major discoveries at the very distal edges of the continental margins have challenged us to revaluate areas that were once written off. Understanding of the complex interplay of transform faults, their effect on heat flow, sediment supply and trapping mechanisms are all at an infant stage. To be clear, the terms pre- and post-salt are irrelevant in the distal segments of the North Gabon Margin. This play exists beyond the Aptian salt basin, as it does in Sergipe Alagoas, and has a Cretaceous focus. Primary reservoir targets have been identified within the Cenomanian and Senonian.

What can be done to maintain Gabon’s competitiveness as an upstream market?

COOPER: The issues affecting Gabon’s competitiveness are much the same as anywhere else. There needs to be an attractive but balanced fiscal regime that delivers a return proportionate to the risk taken; a stable fiscal regime where production-sharing contracts are honoured; and an efficient regulatory regime that oversees the industry sensibly without being overly bureaucratic. As an oil producer since the 1970s, Gabon has been able to refine its regulatory and fiscal regime over the years, and in our view it is broadly achieving these three goals. In our experience the fiscal terms of existing blocks are fair and reasonable, and we are in the process of completing our second exploratory drilling offshore, which has run smoothly from both a logistical and a regulatory perspective.

How does mandatory participation in upstream blocks by state -owned operators affect investment?

COOPER: In recent licensing rounds, Gabon has been pushing for greater state participation, and the impact of this on assessing the appeal of new blocks comes down to simple economic analysis. However, this is only one part of the economic equation, and is set alongside other factors such as royalty rate, profit oil splits and corporate tax rates. The government of Gabon is a solid, well-established partner, so their participation on a day-to-day basis is viewed in many cases as a benefit – and one that is expected to continue with the state oil company formed in 2011, which participates separately and alongside direct government interests.

What are the biggest challenges operators face when conducting deep offshore exploration and production in Africa?

COOPER: The big issues tend to be regulatory and logistical. In more established hydrocarbons provinces such as Gabon and Nigeria, logistical issues are less of a concern since they have full-time supply bases and because well permitting and equipment importation are usually covered by an existing regulatory and excise regime that minimises disruption. In less mature areas, these can become significant issues, impacting costs and lead times for drilling. This in turn leads to greater emphasis on pre-planning well ahead of drilling campaigns. Local content requirements can also have an effect in countries with less-advanced supply chains.

To what extent has competition increased in Africa for upstream equipment and human resources?

COOPER: The deepwater rig market has been tight in recent years, but has eased considerably in the last 12 months. Factors affecting the rig market include increased supply in rigs as new units come into the market; long-term contracts rolling off; and lower budgeted capital expenditure by major oil companies, which has resulted in reduced demand for exploration and development drilling. Previously, rig owners were looking for long-term, multi-well contracts, but with reduced demand, units have become available on tenders of shorter duration and offered at much lower day rates.

Anchor text: 
Nicholas Cooper

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The Report: Gabon 2014

Energy chapter from The Report: Gabon 2014

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