Sierra Leone’s latest licensing round

Sierra Leone’s 4th Offshore Licensing Round offers E&P companies the opportunity to enter into an emerging petroleum province, although changes to the country’s fiscal terms that make the nation less competitive than it used to be may put the round at risk, according to market analyst GlobalData.

Currently, only African Petroleum and European Hydrocarbons hold licensed blocks in Sierra Leone. These blocks, SL-4A-10 and SL-03, have recently entered into their second extension period, expiring in November 2018, or in September 2019 if the operator commits to drill one well in each by the end of 2019.

Discounted state take (percentage) for Sierra Leone, old and new terms, has been modelled for hypothesised fields of different sizes and compared with the fiscal regimes of neighbouring countries Mauritania, Senegal, The Gambia, Guinea-Bissau, Guinea, Cote d’Ivoire, and Ghana. According to GlobalData, Sierra Leone ranks 4th compared to the neighbouring countries, with discounted state takes of between 70% and 71%. This compares to state takes of 58% to 90% for the selected peer group of countries. Terms offered under the 4th Offshore Licensing Round have increased Sierra Leone’s discounted state take by 3-4% relative to previous rounds.

To date, mean recoverable reserves for fields across the entire west coast of Africa stand at 197mn boe, with the region displaying a typical field size distribution. Against this backdrop, Sierra Leone and its immediate neighbours are underexplored, leaving a reasonable possibility that considerable volumes of yet-to-find hydrocarbons remain, comments the analyst.