Sierra Leone: Oil and Gas Exploration - Sierra Leone Re-Opens Fourth Licensing Round

The Petroleum Directorate has yesterday informed the media that Sierra Leone has re-opened its Fourth Licensing Round with the opening of the Republic's waters for petroleum licensing, utilization of more flexible block framework as the basis for licensing, launching of direct tender for license applications where 50% or more of the application area is in water depts in excess of 2,500m, and the launching of an open tender for all other license application.

Director General of the Petroleum Directorate, Timothy M. Kabbah, told pressmen that following the publication in the Sierra Leone Gazette, both tender processes have been launched on Tuesday 21st May, 2019.

"The open tender process will run for six months and the direct tender process for four months. The deadline for open tenders is 22nd November 2019.Direct tender negotiations will close on 20th September 2019.It is however possible for licenses to be awarded by direct tender prior to the close date," he said.

To participate in either the direct or open tender, he said companies must prequalify for that process by fulfilling all financial, technical and health ,safety and environment(HSE) related elements relevant to their respective applications.

He observed that given the predominance of ultra-deep water areas in the direct tender process, each applicant will be expected to evidence that they possess the financial and technical capability to safely operate in ultra-deep water.

The Petroleum Directorate boss said at the launch of the Fourth Licensing Round, five License areas were defined and released for licensing and that the industry consultation process has highlighted that rigid approach has not provided the Directorate with the flexibility its requires.

"To address this, and with the Republic's offshore waters now fully open to licensing (excepting environmentally protected estuaries and a 5-km wide coastal fisheries zone), the Directorate has decided to utilize pre-defined, gratular block frameworks. Using this framework, applicants are invited to delineate their areas of interest by assembling multiple contiguous blocks. 'A' Licence applicant must cover an area which is equivalent to at least 3 blocks in size and may be made up of a combination of whole and partial blocks," he said.

He encouraged all applicants to invest in the extensive inventory of geophysical and well data owned by the government of Sierra Leone in order to appropriately inform their initial exploration period and technical skills.

The Director General further told pressmen that the decision to re- launch the Fourth Licensing Round came as a result of a six months consultative meeting the directorate held with high-quality international oil and gas companies in a bid to solicit their feedback in respect of the said development.

He said at the conclusion of the consultative meetiny,companies increasingly recognised the proven nature of Sierra Leone's working hydrocarbon system, license round participants considered a broad basis of prosperity which spanned a range of geographic locations, play types and water depths, and prospectively extended beyond the boundaries of license areas made available at the of the Fourth Licensing Round.

"As such, a key conclusion drawn by the Directorate is that the conditions offered pursuant to the original tender process no longer provided the government of Sierra Leone with a structure broad enough to explore the full range of investor interest that has been expressed," he said.

"He said the directorate had noted that a portion of the interest shown lies in water depths in excess of 2,500 meters- the boundary line between deep and Ultra-deep waters. It was the view of the directorate that the number of companies with the financial and technical capability to operate safely in such ultra-deep water areas is very limited. Potential investors acknowledged that, their understanding of Sierra Leone's prosperity will benefit from working with the world-class inventory of seismic gravity, magnetic and well data and studies that is owned by the government. "

Timothy M. Kabbah further informed journalists that he led a four-man Petroleum Directorate team to participate in the 2019 Annual Convention & Exhibition (ACE) at the American Association of Petroleum Geologists (AAPG) that took place at the Henry B. Gonzalez Convention Center in San Antonio, Texas from 19- 22 May 2019.

He observed that the said meeting was very much important to the Petroleum Directorate as the 7,500 professionals that attended from different countries shared innovations and best practices that could serve as a road map for the institution.

According to a release read to the media, Kabbah used the occasion to announce the re-opening of the Sierra Leone's Fourth Licensing Round for oil and gas exploration, following wide range consultations with multi-faceted actors in the industry.

The release stated that based on investors comments, government concluded that investor interest extends to multiple areas offshore Sierra Leone, which cover a wider footprint that was initially offered for Licensing.

The release further stated that the conditions offered pursuant to the original tender no longer provide the Government of Sierra Leone with a structure broad enough to explore the full range of investor interest that has been expressed, and in as much as significant interest was shown in the country's ultra-deep waters, the number of companies with the financial and technical capability to operate safely in such ultra-deep water areas is very limited.

"The Government then made the decision, consistent with the Petroleum (Exploration and Production) Act of 2011, to open the entire Sierra Leone offshore to exploration and adopt a hybrid direct and open system for tendering which will enable the Directorate to rigorously match the technical skills and financial capacity of investors to the challenges and opportunities to each type of exploration."

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