Moroccan offshore exploration agreement signed

July 11, 2005, 16:00 CEST

Hydro signed an agreement about exploration off the Moroccan coast on Monday. Hydro will be operator of the exploration program, with an ownership interest of 48.75 percent. Dana Petroleum and ONAREP will be partners in the project.

The agreement comprises four licences covering 6,540 square kilometres at a sea depth of 300 to 3,000 metres.

”We signed an investigation contract for the North-West Safi licence in April 2004. During autumn last year 1,000 line-kilometres of 2D seismic was collected. Supplemented with complementary geological studies the data confirms possible oil and gas deposits,” says Hans-Helmut Berchelmann, head of the New Areas unit in Business Development.

By acquiring exploration area, outside bid rounds, in countries with favourable tax conditions, Hydro can build a varied exploration portfolio with limited risk, and at the same time exert control through operatorships.

Further collecting of seismic and interpretation of exploration models are now being planned. This work will form the basis for a decision about potential exploration drilling or possible farm-outs or swaps.

Interesting possibilities
Hydro’s North Africa project has identified Morocco as a country with interesting exploration activities in unexplored offshore areas.

In these areas Hydro’s considerable offshore competence – especially from the Nova Scotian continental shelf, which resembles the NW-Safi region – will be useful. The deepwater exploration areas off the Moroccan coast are considered as little explored. Lately, only three wells have been drilled.

”Encouraging geological information from new 2D seismic and a systematic evaluation will now be pursued. Preparations for a major 3D seismic survey have already started,” says Berchelmann.

Focused progress
Hydro’s partners agree that the contract conditions and the flexibility shown by the Moroccan authorities make possible a united, focused progress with a balanced exposure to risk.

”We are happy that Dana Petroleum joined the partnership on May 17th. This company has considerable knowledge about this region and will strengthen the project. A decision regarding possible drilling operations is expected early in 2007.

”Despite that limited deepwater drilling further south has not been successful so far, further exploration efforts are justified to assess the potential on the Moroccan continental shelf,” says Hans-Helmut Berchelmann.

Partners in the NW-Safi licence:
Hydro (operator) 48.75 percent
Dana Petroleum 26,25 percent
ONAREP 25,00 percent