* Seychelles to resume licensing after 2-year break
* New rules to curb speculation
By George Thande
VICTORIA, June 11 (Reuters) - 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 Monday.
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)