U.S. Oil Company Optimistic About Rovuma Basin

Aim News
8 May 2009

Experts of the American oil company Anadarko remain optimistic that they will find oil in the Rovuma basin near the Mozambican border with Tanzania.

They told a group of Mozambican journalists visiting the company's headquarters in Houston, Texas, that the geological data from the basin, both on and off shore, are very similar to those in other parts of the world where oil and natural gas have been found.

Carol Law, the Anadarko exploration project manager for east Africa and the Caribbean, said the company has no intention of stopping its activities in the Rovuma basin until it concludes that there is no oil there. But to date the geological evidence points to hydrocarbon deposits.

Anadarko has completed its seismic exploration, and is now preparing to send in heavy equipment to drill exploratory wells on land and off shore. This work will start in late 2009 or early 2010, and will be conclusive in determining whether a commercially viable oil field really does exist in the basin.

Ade Adeleyede, a Nigerian oil engineer who specialises in drilling, told the reporters that drilling "gives you a kind of geological X-ray", and was the only means of determining whether oil does indeed exist in any particular place. Everything else was just preparatory, giving indications of the likeliest places to drill.

He warned that it is common for an area with no oil to have geological and geophysical characteristics similar to places that do have oil. "That's why, although the Rovuma Basin is geologically similar to other parts of the globe where we have found oil, we cannot be sure right now that it too has oil", Adeleyede said. "Sure, we remain optimistic and willing to continue working, but we cannot be certain that we will be rewarded".

He noted that even in areas where oil fields have already been found, it is perfectly possible to sink new wells that find nothing, or hit such small amounts of oil that they cannot be commercially exploited. Anadarko had experienced this problem last year in Alaska.

Adeleyede remarked that companies spent many, apparently fruitless years looking for oil in Ghana. Only last year did they actually find some.

Even on the periphery of an oil rich region such as the Niger Delta, there were areas that appeared to have good potential, but when the wells were drilled, they were dry. This was a risky business, since it was quite possible to sink many millions of dollars into drilling without any return.

Adeleyede said that so far Anadarko has spent more than 125 million dollars in exploring for oil in Mozambique, and by September this figure may have risen to 150 million dollars. The company's costs will then rise much more when the eight exploratory wells it plans (one on-shore and seven off-shore) are drilled.

Anadarko has to hire the heavy equipment used in drilling. Adeleyede said it would cost a million dollars a day. As a rule, it takes 45 days to drill and test each well.

Final results are not expected for a further one or two years. After the drilling, the Anadarko laboratories must carefully analyse everything the drills have brought up to the surface.

And no-one should imagine that, even if oil is found, Mozambique will become an oil producer overnight. Setting up the oil wells, and all the equipment needed to pump the oil out, could take another five or six years

Anadarko's optimism is shared by the chairperson of the Mozambican Petroleum Institute, Arsenio Mabote. He told AIM that other companies, exploring in other Rovuma basin blocks, have found the same geology as Anadarko.

Companies from Canada, Italy, Norway and Malaysia are exploring, and they had also found "strong signs" of the presence of oil in the blocks that the government has attributed to them.

Mabote too admitted that there is still nothing certain about the presence of oil in the Rovuma Basin. Only drilling would give definitive results. Nonetheless, he argued, the country must prepare for the possibility of becoming an oil producer.

That was why he had come to Texas - he was negotiating with Anadarko for 25 scholarships so that young Mozambicans can be trained as oil engineers in the United States. Such training schemes are already under way in other countries, notably Malaysia.

Such preparations go back a long way. Even the first post-independence government, under President Samora Machel, had suspected that the country might have oil deposits, and sent people abroad for training in oil technology. Mabote himself was trained as an oil engineer in Romania in 1977.

"There are many others like me who were trained in this area", he said, "and that's very good, because if one day we do strike oil, we will enough trained people to deal with it".