Canada-headquartered oil and gas player Zenith Energy has been awarded a three-month exclusivity period to negotiate and finalise terms of a production sharing contract (PSC) for a block containing an oilfield offshore Benin in West Africa.
The exclusivity for a period of three months has been granted by the Ministry of Water and Mines of the Republic of Benin and the PSC is for Block 1, which encompasses the Sèmè oilfield offshore Benin. This comes after Zenith submitted an offer to Benin’s government on 15 September 2022 for the award of an initial nine-year licence to operate this block.
Andrea Cattaneo , Chief Executive of Zenith, commented: “ We are extremely pleased to have been granted the exclusivity to negotiate and finalise the terms of a PSC for Block-1 by the authorities in Benin. Block-1 represents a potentially transformational development opportunity for Zenith because of its sizeable unexploited potential , indicated by its independently assessed oil and gas reserves and past production, and existing field infrastructure. “
Located in shallow water – 30 metres – offshore with onshore facilities and a tank farm for processing of oil production, Block-1, which was discovered in 1967 by Union Oil, covers 551 km2 with over 355 km2 of recent 3D seismic data. Zenith confirmed that this block’s production facilities include three platforms.
Two platforms are located in the Sèmè field with the last being installed during 2013-2016 to develop the Sèmè North, which was discovered in 2015 with a reported discovery of an additional 100 million barrels of oil in place with estimated (2P) recoverable reserves of 16 million barrels utilizing a recovery factor of 16 per cent. The company pointed out that improvements in the recovery factor might be achieved with modern completion and drilling techniques to reach a recovery factor of above 30 per cent.
“We view Benin as an attractive jurisdiction for foreign investment and we look forward with great enthusiasm to working closely with the local authorities towards successfully formalising the PSC,” added Cattaneo.
Furthermore, Zenith highlights that Sèmè is a proven oilfield, with significant unexploited potential, having independently assessed recoverable reserves (P2) of 22-28 million barrels of oil and 428 billion cubic feet of natural gas (Kerr McGee 2005). The company further outlines that this block has produced a reported 22 million barrels of oil to date, with the last production taking place in 1998 at a rate of approximately 2,000 barrels of oil per day when oil prices were below roughly $10 per barrel.
Moreover, Zenith elaborates that 27 wells have been drilled in Block-1 and 24 in the original Sèmè oilfield, with the last three wells having been drilled in 2014-15 to discover Sèmè North. These wells discovered and tested oil in the H5 & H6 reservoirs, the same reservoirs that were producing in the original Sèmè oilfield, in a separate structure. However, due to the prevailing oil price at the time – approximately $30 – further development activities were deemed non-commercial.
With average historical well production rates ranging between 1,500 – 3,000 barrels of oil per day, the last operator is reported to have made infrastructure investments for an amount exceeding $100 million prior to exiting the project due to low oil prices. Zenith sees “significant development and exploration potential” in the emerging Syn-Rift play extending from neighbouring Nigeria.