* Genel active in Morocco, Malta
* Gulfsands left Syria for Morocco
* Cairn scents promise offshore Spain
By Sarah Young
LONDON, Aug 23 Middle East turmoil has given a
fresh spur to energy companies looking for big finds further
afield to more stable and inviting hosts Morocco, Malta and
Close to known reserves and large markets, they offer
tempting terms for explorers without the risks of production in
Syria, Libya or Egypt.
Morocco has lured companies with the promise of a link to
the energy-rich formations of west Africa, while in Malta there
are hopes of an extension of Libya and Tunisia's geology.
Off Spain, Cairn Energy sees geological similarities
with Israeli waters, home to two of the largest offshore gas
fields found in the past decade.
"You either have to go to the technical frontiers or the
political frontiers. In Morocco and Malta we're dealing with
much more technical risk than political risk," Genel Energy's
Chief Executive Tony Hayward, the former boss of oil
major BP, told Reuters.
From Chevron, the second largest U.S. oil company
with a market capitalisation of $231 billion, to Fastnet
, listed on London's junior market and worth $80
million, firms have flocked to Morocco over the last eighteen
Gulfsands Petroleum typifies the trend. It was
pumping about 10,000 barrels of oil equivalent per day in Syria
before the civil war started and sanctions imposed.
It shut up shop there in 2011, losing more than 90 percent
of its production, and has since moved into Morocco.
"As you might imagine, after Syria what we're looking for is
some stability, and Morocco's got terrific political stability,
but it also has the best fiscal terms of any country in the
Middle East and North Africa region," Gulfsands's commercial
director Ken Judge said.
Morocco defused Arab Spring-style protests in 2011 through
social spending, harsh policing and constitutional reforms.
Over 10 discovery wells are due to be drilled off its coast
in the next 18 months, compared to analyst estimates of around
nine since 1990.
Genel will start drilling off Malta in the first quarter of
next year while Britain's Cairn will start a well in Morocco in
September. Cairn says on its website it could also start
drilling in Spain in 2015.
"Given some of the challenges you'll find in some of the
more established (hydrocarbon producing) countries in North
Africa, you'd say it was worth taking a punt on Morocco at this
point in time," Femi Oso, an analyst from energy consultancy
Wood Mackenzie, said.
The punt comes at a cost of around $80 million to drill an
average well off the coast of Morocco, according to one company
which declined to be named. Between them companies there are
targeting billions of barrels of oil, estimated but as yet
Modern technology has helped discover huge new oil and gas
fields over the last decade in countries formerly overlooked by
oil companies such as Ghana, Uganda and Mozambique, prompting a
scramble for new acreage.
What the countries have in common, and what executives agree
is key to nurturing new drilling, is attractive tax terms.
"Because of fiscal terms in Morocco, even a modest discovery
of say 20 million barrels...would be phenomenally lucrative for
our company," Gulfsand's Judge said, referring to the company's
solely onshore presence there.
Morocco is one of the world's most energy-poor countries,
importing around 95 percent of its needs, chiefly from Algeria,
according to the World Bank.
Energy imports accounted for more than a quarter of the
country's imports and contributed to a record trade deficit of
$23.6 billion last year.
Companies exploring offshore where developments tend to be
more expensive need to find bigger fields. Executives told
Reuters that in both Morocco and Malta finds of between 50
million and 100 million barrels of oil would make for
commercially attractive developments, remaining tight-lipped
Executives say governments often seek to change terms once
big finds are made, but for now half a dozen companies polled by
Reuters say the incentives are worth the risk.
The Moroccan government take of cash flow produced from any
oil or gas field in Morocco would be about 30 percent lower than
what was typical for Algeria, Libya and the rest of the North
African and Middle East region, Wood Mackenzie analysts
One company looking at the region said the fiscal terms in
Spain were as attractive as Morocco.
Like Morocco, Spain is a big energy importer, buying in over
80 percent of its energy needs, spending more than 40 billion
euros - or about 4.5 percent of gross domestic product - a year.
In the midst of an economic crisis and struggling to keep
energy debts in check, the country is keen to develop any oil
and gas reserves it might have.
"We're looking for hidden value in Spain," Cairn Chief
Executive Officer Simon Thomson said, explaining that a historic
focus on beach tourism meant that much of the deep water off the
country's coast had never been drilled.
"We do want to invest there...It's part of our long term
plan to position ourselves."