BEIJING (Dow Jones)–French oil and gas major Total AS (TOT) plans to drill its first offshore East Africa exploration well early next year, hoping to emulate huge gas discoveries made by other oil majors offshore Tanzania and Mozambique, the company’s chief executive said Sunday
“We are exploring offshore Kenya, and apparently it has the same kind of prospects as offshore Tanzania and Mozambique,” Christophe de Margerie told Dow Jones Newswires in an interview. “There might be oil too, we are not just looking for gas. We have acquired the seismic results, but until you drill, you don’t know.”
Italy’s Eni SpA (E) and Anadarko Petroleum Corp. (APC) have both announced major gas discoveries further south, offshore Mozambique, and are considering large-scale investments to export the gas by tanker in the form of liquefied natural gas.
Last month Exxon Mobil Corp. (XOM) and Norway’s Statoil ASA (STO) also said a recent discovery off the coast of Tanzania contained large quantities of natural gas, further cementing the idea that East Africa could become a big exporter of LNG.
“Maybe we have been late for Mozambique. But there are benefits for being onshore,” de Margerie said. “it is far cheaper. Those new potential discoveries, they are very deep offshore so the cost of development will be rather high.”
Onshore in Africa “we have been acquiring a lot of blocks in Kenya, have acquired part of the shares of Tullow Oil PLC (TLW.LN) in Uganda and have acquired blocks in Congo on the other side of Lake Albert, and we will be able to start exploring sooner or later in South Sudan.”
Offshore West Africa, Total will drill by end-2012 for the first time in an Ivory Coast block acquired two years ago, he noted.
Total has said it plans to grow its oil and gas output by 3% this year and 2.5% annually through 2014, assuming crude price stay around $100 a barrel.
The executive noted that Total is in talks to invest in Iraqi Kurdistan, and that he sees no problem in doing so as the autonomous region is part of Iraq. “Kurdistan is Iraq, and Baghdad is Iraq. It is up to them to decide what they do to develop their reserves.”
Exxon Mobil recently signed a deal to enter the region, rebuffing opposition from Iraq’s central government, which has said Kurdish deals without its approval are illegal.
De Margerie said Total hasn’t yet decided whether to enter Iraq’s planned fourth oil round.
Details of the exploration round aren’t yet certain, he said, adding that it seems that if a company discovered oil, “You might not get permission to develop your discoveries until after a period of time, to be determined by the government.”
“We are not saying we are not interested, but if they are saying you can explore but it is not sure when you can develop, usually this is not the sort of deal we like.”
-By Simon Hall, Dow Jones Newswires