The Namibian government has approved a new petroleum agreement on offshore Block 1711 for a group led by a Chinese investment firm, granting former interim operator Energulf Resources a 15% stake.
Energulf said in a statement that privately held Gazania 148 Investments would hold a 75% stake in Block 1711. Shaanxi Yuyang Petroleum Technology Engineering, a unit of the investment firm, will operate the block.
Namibian state-owned player Namcor will hold a 10% carried interest to production and Energulf will hold the remainder.
The petroleum agreement replaces a license for the block granted in 2006 that was set to expire.
Under the old license, a group led by Russia’s Sintezneftegaz drilled the Kunene-1 wildcat in 2008 but found no commercial hydrocarbons. Sintezneftegaz relinquished operatorship in 2010 after running into financial troubles and Toronto-listed Energulf was appointed the interim operator.
The Kunene failure was said to cost more than $100 million, though sources told Upstream in 2010 that the ultimate price tag was closer to $141 million.
The new license has a term of four years starting this month and may be renewed twice for an additional two-year periods.
Under the agreement, the companies must each period spend at least $40 million on exploration and drill at least one well.
The initial four-year term will include the acquisition and processing of at least 2500 square kilometres of 3D seismic in the south-western quadrant of the block.
Based on the results of the shoot, the companies will determine the exact target, which they expect to be around 4500 metres below the sea floor - roughly the same depth as the Kunene probe.
The target formation for the next well will likely be the Hartmann prospect, though the "priority target" could change, an Energulf spokesman said.
Block 1711 sits in the Namibe basin in around 1000 metres of water near the boundary of Angola.
A prospective resource report for the block prepared by Netherland Sewell & Associates identified four prospects and nine leads, as well as a mean estimate of 3.2 billion barrels of potentially recoverable oil, according to Dallas-based Energulf.
"We are delighted to have offshore Block 1711 back on track," said Energulf chief executive Jeff Greenblum.
"It is a world-class project with multiple prospects and three independent plays, being geologically similar to the highly successful fields of the Santos basin, Brazil, nearby offshore Luanda, Angola and Deepwater Gulf of Mexico."