* Seychelles to resume licensing after 2-year break
* New rules to curb speculation
By George Thande
VICTORIA, June 11 Seychelles has invited oil and
gas companies to bid for exploration blocks, ending a two-year
moratorium and introducing new rules for bidders after
completing a review of laws regulating the sector.
East Africa has become a focus for exploration after oil
discoveries in Uganda and Kenya as well as natural gas finds in
Tanzania and Mozambique. Seychelles is attracting interest but
had put off licensing more blocks until it reviewed its laws.
"We want bona fide explorers to invest in Seychelles and
drill wells to test our petroleum potential rather than
speculate and sit on an area for their own commercial purposes,"
President James Alix Michel, who is also in charge of the
hydrocarbons portfolio in government, said in a statement on
Seychelles does not have a fixed number of exploration
areas, but companies can bid for areas of up to 10,000 square km
each out of its 1.3 million square km Exclusive Economic Zone.
Under the new licensing rules, once a company approaches the
government on a first-come, first-served basis for an
exploration area, rivals will have up to 90 days to submit bids
for the same block.
Once the 90-day bidding period expires, the government will
select the company that has demonstrated the financial ability
to conduct exploration and go into production if it strikes
commercial quantities, regulator PetroSeychelles said.
In March PetroSeychelles said companies had approached them
at the time for acreage but could not place bids before the new
legislation was in place.
Michel said that while Seychelles wished to attract
investment to the sector and get more exploration wells drilled,
it also had to have the right conditions in place so that its
citizens would benefit in the event of sizeable discoveries.
PetroSeychelles said that among the significant features of
the revised licensing system, the regulator will pay more
attention to the details of each bidder's plan and proposed time
frame for exploring and developing an area.
Seychelles operates under concession contracts, whereby the
company keeps exclusive rights to develop and produce the
petroleum if it is commercial.
Under the new licensing regulation, exploration companies
will be required to pay 10 percent of petroleum revenues as a
royalty, up from a previous 5 percent.
So far, Afren Plc and Australia's WHL Energy
are the only companies holding exploration licences in
Seychelles, an archipelago of islands in the Indian Ocean
northeast of Madagascar.
(Reporting by George Thande; Writing by George Obulutsa;
editing by Jane Baird)