Eni, TotalEnergies, Oxy sign Algerian PSC deal
TotalEnergies, Eni, Sonatrach and Oxy (Occidental Petroleum) have signed a $4bn production sharing contract extension for two onshore blocks in eastern Algeria's prolific Berkine basin.
The agreement covers the 18 oil, condensate and gas fields situated in Berkine basin blocks 404A and 208. It has been signed under Algeria's updated 2019 hydrocarbon law, which is designed to lure more upstream investments into the country. Eni holds a non-operated 12.25% stake in both licence areas. Oxy was previously responsible for 24.5% of the development and production costs.
Eni and Sonatrach revealed the news in separate announcements July 19. The two licences are situated around 300 km southeast of Sonatrach's Hassi Messaoud oilfield. Previously, the PSC for block 404 fields was due to expire between December 2022 and 2036. The rights for block 208 would have lapsed in 2032.
Sonatrach expects the PSC extension to garner $1bn of investment in the two onshore areas. This investment could unlock more than 1bn barrels of oil equivalent in recoverable reserves, boosting the average ultimate recovery rate to 55%.
Block 404 and 208 lie on the "contractual" perimeter of the Berkine basin, underpinning Sonatrach's efforts to monetise additional oil and gas resources. In terms of Oxy's net output, the block 208 and 404 fields yielded around 43mn barrels of oil equivalent/day in 2021.
Berkine's perimeter was included in the scope of Algeria's 1989 hydrocarbon law, and has since produced an extra 2.7bn barrels of oil equivalent in hydrocarbon output, following capital expenditures worth more than $10bn.
The new PSC sets out requirements to collect high-density 3D seismic data of the area. Sonatrach also expects the shareholders to fund 100 new oil wells and the conversion of 46 existing wells, as well as the implementation of two enhanced oil recovery pilot projects.
Digital oilfield solutions are also covered by the new contract, as are environmental projects that should help the shareholders reduce the carbon footprint.
Block 404 is home to the SFSW-1 discovery well drilled by Anadarko Petroleum, Eni and Maersk Oil, back in 2003. The well encountered a 36-ft net oil pay and flowed back 2,689 barrels/day of 47 degree API gravity oil, as well as 4.7mn ft3/d of natural gas.
Preparations for FEED design at block 208 also began in 2003, with first production expected five years later. The block contains four oil and condensate fields projected to yield more than 100,000 barrels/day of crude and condensate, though more recent figures could not be ascertained.