Anadarko venture discovers new oil frontier - Potential basin runs 1,000km from Ghana to Sierra Leone

Anadarko venture discovers new oil frontier - Potential basin runs 1,000km from Ghana to Sierra Leone
By Carola Hoyos
Copyright The Financial Times Limited 2009
Published: September 15 2009 23:32 | Last updated: September 16 2009 12:31
http://www.ft.com/cms/s/0/480969e8-a22a-11de-9caa-00144feabdc0.html


Anadarko, the US oil group and its partners Woodside of Australia, Repsol of Spain and Tullow Oil of the UK, confirmed on Wednesday that they had found a new oil coast from Sierra Leone to Ghana in which they expect to discover several more huge oil fields over the coming five years.

The announcement was made on the back of positive drilling results of the Venus well off the coast of Sierra Leone, 1,100km from Ghana’s Jubilee field, Africa’s largest deep water field.

“The chance of there being at least one more Jubilee-sized field along the coast between Ghana and Sierra Leone has greatly increased,” said Aidan Heavey, chief executive of Tullow, which holds large tracks of drilling rights across the newly discovered basin. “I believe we will find more than one.”

The Jubilee field, discovered in 2007, holds as many as 2bn barrels of oil and will propel Ghana into the league of the world’s top 50 producers after it begins to produce next year.

Peter Hitchens, analyst at Panmure Gordon, the financial services group, said before the official announcement: “If Venus comes in, they are into a grand slam.”

That is because Venus-B lies off the shores of Sierra Leone and is at the western edge of a geological system that includes the large discoveries off Ghana’s shores.

The field, in which Tullow and Anadarko also have large stakes, catapulted Tullow from a small London-listed exploration group to one of the UK’s largest oil companies by market value.

Shares in Tullow, which have been buouyed in recent days by takeover speculation, rose a further 6.8 per cent to £11.61 in lunchtime London trading, giving the company a market capitalisation of some £9.3bn.

Bob Daniels, Anadarko’s senior vice-president of exploration, said: “The Venus discovery confirms the existence of an active petroleum system in the basin and enhances the prospectivity of our vast West Africa acreage position.”

He added: “With Jubilee on the east and Venus on the west, we have established bookends spanning approximately 1,100km (700 miles) across two of the most exciting and highly prospective basins in the world.”

Venus was drilled to a depth of about 18,500 feet in about 5,900 feet of water and encountered more than 45 net feet of hydrocarbon “pay”, Anadarko said.

Anadarko and Tullow have made a bet on the coastline, snapping up rights to explore the area at low prices when their oil reserves were unknown. Woodside and Repsol, which each hold 25 per cent of the Sierra Leone asset, will also benefit. Anadarko owns a 40 per cent share, while Tullow has 10 per cent.

Shares in Woodside closed 4.8 per cent higher in Sydney ahead of the announcement. Repsol shares were 2.4 per cent higher in Madrid.

The Venus well does not prove that the area is full of oil, but it makes it more likely and will sharpen bigger companies’ interests.

The discovery will also be news to the governments of Ivory Coast, Liberia and Sierra Leone, none of which are big oil producers. But they have watched Ghana leap from being a cocoa exporter with no oil to a country expected to become one of the world’s top-50 oil producers when the Jubilee field begins to pump next year. The Jubilee field is Africa’s largest deep water field and is thought to hold as many as 2bn barrels of oil, while the coastline could increase that.

Stewart Williams, analyst at Wood Mackenzie, the consultants, said the results of the Venus well were important. He said: “It opens up a new play and makes the area valuable.”

A window into the region is Kosmos, the US company backed by the Blackstone Group and Warburg Pincus, which initially discovered the Ghanaian deposits and is up for sale. It could fetch about $4bn (£2.4bn), analysts said, as companies such as Chevron of the US, Royal Dutch Shell and Chinese and Indian companies look through the books.

But in the past weeks the Ghanaian government has delayed the sale by making ever-increasing demands – a fate that oil executives say could also befall Ghana’s neighbours as the true value of their offshore reserves becomes clear.