SacOil to Explore Congo 2013

DRILLING in the oil block known as Block III in the Democratic Republic of Congo could start in the first quarter of next year, Robin Vela, the CEO of the upstream oil and gas company SacOil, said yesterday.

This follows the recent decision by the Congo government to approve a presidential ordinance guaranteeing French energy company Total’ s security of tenure. Total is the operator of Block III, with a 60% interest.

SacOil, which is listed on the JSE and the London Stock Exchange’s Alternative Investment Market (AIM), owns an effective 12,5% of the oil block, which is situated in Albertine Graben in the eastern part of the Congo, on the Uganda border.

Mr Vela yesterday said the presidential ordinance was a significant step in the project. “Security of tenure is always a concern. Major players such as Total want title,” he said.

He said with the granting of the presidential ordinance, there were no pending significant administrative approvals preventing Total from commencing with work.

“Shareholders want to know if there is oil,” he said.

Block III is mainly a virgin exploration territory with no seismic data yet, but SacOil has been buoyant because of the block’s close proximity to other oil discoveries on the Uganda side of the border.

“We believe there is huge potential in this asset due to the neighbouring oil and gas discoveries in Uganda, which suggest that Block III is in an attractive hydrocarbon address. We look forward to positive test results,” Mr Vela said.

He said that, in terms of the sale agreement with Total, sealed last year, SacOil would not incur capital costs in the project until the final investment decision.

“At that point, we can debt finance our interest for development. We will be borrowing money against reserves instead of exploration,” Mr Vela said.

SacOil, which has an acquisitive growth strategy, was still looking for opportunities in the rest of Africa.

The company already has a presence in SA, Nigeria and Congo. “We want to build a balanced portfolio of exploration, near production and production assets,” Mr Vela said.

SacOil has set its sights on opportunities in western, central and southern Africa.

In southern Africa, SacOil was looking for and evaluating gas opportunities in Mozambique, Mr Vela said.

SacOil wants to follow in the footsteps of global oil and gas explorer Tullow, which started as a small company and expanded through acquisitions.

Source: BuinessDay Live