WEST AFRICA
thereby proving that Seychelles possesses a
working hydrocarbon system.
Two IOCs hold exploration licenses in
the waters of the Seychelles, namely, Afren,
a UK-listed company, and WHL Energy, an
Australian-listed company. In August 2014, two
new applications for exploration blocks were
made by means of the Seychelles so-called
Open File Licensing Initiative. The Open File
award process works as follows: An application for a 10,000-sq km ( 3,861-sq mi) area can
be made at any time, then verifcation that certain minimum criteria have been met will take
place under the auspices of PetroSeychelles,
the national oil company of Seychelles. Then
there will be a notice of the application’s fling
and the solicitation of competitive applications
(with a 90-day limit). As far as the two new applications are concerned, the 90-day period
within which interested companies may submit competing bids for the same areas, commenced on Aug. 18, 2014, and is drawing to a
close. Consequently, it may not be long before
the number of entities holding exploration licenses in Seychellois waters doubles.
Even though the industry maintains a
minor presence in the Seychelles, the country is, from a regulatory perspective, fairly
well-placed to accommodate many more
IOCs should a discovery trigger a wave of
interest. Not only does the country possess
industry-specifc legislation and an effcient
licensing process, but also it has a readily
downloadable model petroleum agreement
that was developed with Norwegian assistance during 2013. The government has
recognized the importance the discovery of
petroleum would have and it has put in place
a legal framework that facilitates exploration
within its marine territory.
Mauritius
Mauritius, which has a population of
roughly 1. 3 million, obtained its indepen-
dence from the UK in 1968. Since then it has
moved from a predominantly low-income,
agrarian-focused economy to a diversifed,
upper middle-income affair where the econ-
omy rests on, amongst other things, tour-
ism, manufacturing, fshing, and fnancial
services. Mauritius ranks frst on the IIAG
and in 2013, for the ffth consecutive year,
was the highest ranking African country in
the World Bank’s “Ease of Doing Business”
report, which is based on a variety of factors
including economic openness, regulatory
effciency, and the rule of law. However, the
country does not have any proven oil or gas
reserves. All of the fossil fuels that are re-
quired to maintain the Mauritian economy
are imported and Mauritians consume more
than 25,000 b/d of petroleum products.
While the presence of commercial quantities of hydrocarbons could dramatically
reduce the country’s dependency on foreign
resources and strengthen its economy, little
exploration has occurred. Following an ex-
ploration program conducted by Texaco in
the 1970s, the results of which were inconclusive, it appears that only India’s Oil and
Natural Gas Corp. (ONGC) has shown an
interest in conducting limited exploration
within Mauritian waters. As such, the hydrocarbon potential of Mauritius remains
an unanswered question and, considering
the country has one of the largest exclusive
economic zones (EEZs) in the world, it is a
question that may take a while to answer.
However, Seychelles and Mauritius jointly
have taken steps that may help to shed light on
the hydrocarbon potential of the latter. In 2011,
following a jointly submitted claim to the United Nations Commission on the Limits of the
Continental Shelf for 396,000 sq km (152,896
sq mi) of the continental shelf beyond the
200-nautical mile EEZs of the two countries,
Mauritius and Seychelles were granted joint
rights to manage the relevant area, namely,
the so-called joint management area (JMA).
The two countries are establishing a Joint
Commission to manage, among other things,
the exploitation of resources of the seabed
within the JMA. Also in August 2013, it was
announced that an authority would be established to manage oil and gas activities in the
JMA. Although the relevant announcements
went so far as to state that all revenues would
be shared on a 50/50 basis, the two countries
are still working on the requisite legal and
administrative frameworks. No indication has
been given as to when the JMA will be opened
for oil and gas-related exploration. Nevertheless, the establishment of the JMA and the
creation of frameworks that will allow for the
exploration for oil and gas are commendable
steps that may well shed some light on the hydrocarbon potential of Mauritius.
A potential hurdle that the country will
need to overcome if it wishes to host a pros-
perous oil and gas industry, is the fact that
the law that currently governs upstream
activities in Mauritius, the Petroleum Act 6
of 1970, is out of date and out of step with
best international practice. The act is three
pages and contains 11 sections; it cannot
be expected to govern a modern oil and
gas industry. The act ought to be revised
to attract more IOCs by offering terms that
encourage exploration. In view of the estab-
lishment of the JMA and the fairly recent up-
swing in oil and gas activities in Seychelles,
the revising of the act should take compara-
tive cognizance of the approach adopted by
Seychelles and, of course, international best
practice vis-à-vis oil and gas-related legisla-
tive frameworks.
Although Mauritius is, from the perspective of general good governance, some distance ahead of Seychelles and the Comoros,
it is not the leader of the pack, so to speak,
when it comes to industry-specifc developments. The oil and gas industry in Mauritian
waters is truly embryonic and, without a
signifcant rise in exploration-related activities, proven reserves appear to be a distant
prospect.
Conclusion
Although these IOCs have an admirable
appetite for exploration in what are still considered to be frontier waters, Comorian,
Seychellois, and Mauritian dreams of hydro-carbon-based wealth must remain tempered
by the possibility that the impending exploration may reveal a lack of commercially viable reserves. As Duncan Clarke wrote in
his previously mentioned book, “New seismic effort could in time put Comoros on the
oil map – or take it off it.” It will only be as
a result of heightened exploration that the
question of whether or not archipelagos of
the Indian Ocean possess signifcant oil and
gas reserves will be answered.
Oil and gas activity off the islands of the
Indian Ocean is unambiguously embryonic.
Nevertheless, it is clear that these islands are
becoming increasingly attractive and they may
well demonstrate that not all the action, so to
speak, is to be found on the continent itself.
According to Eddie Belle, CEO of PetroSeychelles: “Once we have the frst discovery,
then there will be a food of companies.” •
Even though the industry maintains a minor presence
in the Seychelles, the country is, from a regulatory
perspective, fairly well-placed to accommodate many
more IOCs should a discovery trigger a wave of interest.
