Blocks 1, 3 and 4 offshore Tanzania cover a 28,050km2 area of the Mafia Deep Offshore Basin and northern portion of the Ruvuma Basin, located in water depths ranging from approximately 100m to greater than 3,000m.
On 28 October 2005, the Group was awarded a 100% interest in Block 1, offshore Tanzania. The Government of the United Republic of Tanzania has back-in rights of 12% in the event of a commercial discovery. In 2006, the Group acquired a 100% interest in Blocks 3 and 4 which commenced on 19 June 2006. The Government has a back-in right of 15% in these two blocks.
On 26 May 2010 the Company announced that BG International Limited had entered into a farm in agreement whereby, subject to the satisfaction of certain earning obligations, it would earn a 60% interest in each of the PSCs.
In 2006, the Group completed a considerable amount of work to establish a stratigraphic framework for the whole of the southern Tanzanian offshore area in order to gain a better understanding of potential reservoir distribution and source potential. Infill 2D seismic surveys were acquired in Block 1 in 2005 and Blocks 3 and 4 in 2006. Further 2D and 3,500km2 of 3D seismic data across all three blocks were acquired in 2008 to mature a number of prospects to a drillable status.
Based on these data, the Group has built a significant portfolio of large prospects, many of which have multiple targets. The probability for success for many of these prospects is enhanced because of the interpreted presence of seismic Direct Hydrocarbon Indicators (DHIs). DHIs are the observed response from the hydrocarbon-water contact or the change in response between hydrocarbon saturated and water saturated reservoir rocks. Both types of DHIs are observed in Blocks 1, 3 and 4.
There is a considerable body of evidence to suggest that the petroleum system in the deepwater areas can generate oil, but nearby discoveries at Mnazi Bay, Songo Songo, Mafia Island, Windjammer suggest that gas will also be present. Given the size of the prospects, it is likely that gas discoveries would be commercially attractive and able to support a significant LNG development. The Joint Venture has entered into a series of mid-stream gas commercialisation agreements with the Government of Tanzania that provide the basis under which significant gas discoveries can be developed.
The Joint Venture is currently in the First Extension Period for Block 1 (December 2009 to December 2013) and the First Exploration Period for Blocks 3 and 4 (November 2006 to October 2010). The First Extension Period is for a term of four years and carries a work commitment of one well in each block. The Second Extension Period is for a term of three years and carries a work commitment of a single well in Block 1 and two wells in each of Blocks 3 and 4.
The Joint Venture has contracted the semi-submersible rig Deepsea Stavanger to drill two to three wells during 2H 2010. Following completion of the first drilling campaign a further 4,000km2 of 3D seismic data will be acquired during 1H 2011.