Murphy Oil says optimistic on Equatorial Guinea PSC

CAPE TOWN Tue Oct 30, 2012 10:24am EDT

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CAPE TOWN Oct 30 (Reuters) - U.S.-based Murphy Oil Corp is optimistic it could finalise an offshore production sharing contract (PSC) with Equatorial Guinea by early 2013, a senior official said on Tuesday.

Murphy Oil, the operator with a 40 percent stake, was one of four companies to sign an initial agreement with the Ministry of Mines, Industry and Energy in June for blocks J-14, J-15, K-14 and K-15 offshore of Rio Muni in the west African country.

Vanco Oil and Gas, Dana Petroleum and the national oil company GEPetrol were the other signatories.

"We signed that back in June and we've been negotiating PSC terms since then. We are optimistic that we will get somewhere with that, possibly by the end of this year, but more likely early next year," said Derek Stewart, senior vice president for exploration and new ventures. He was speaking to Reuters on the sidelines of an African oil conference.

He said Murphy Oil, which already produces African oil from its offshore Azurite field in the Republic of Congo, was waiting for resolution to a maritime border dispute between Cameroon and Equatorial Guinea over its Ntem field.

Operations within the Ntem concession area are currently suspended under the force majeure provisions of the licence due to an overlapping maritime border claim between Equatorial Guinea and its northern neighbour.

"We haven't made a big investment yet, but that is why we are cautious. If we go out there and make an exploration discovery and you find part of that structure extends into disputed acreage, does that mean the development will be held up?," said Stewart.

In November last year, Sterling Energy signed a farmout agreement with Murphy, in which the U.S.-based company was assigned a 50 percent working interest in and operatorship of the deep-water Ntem field. Sterling retained a 50 percent non-operated working interest.

Speaking to delegates, Sterling Energy's exploration director, Philip Frank, said they were hopeful drilling would commence in the disputed block late 2013 or early 2014.

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