Seychelles gears up for oil exploration in its waters By Patrick Joubert |03 September 2022
The signing of the agreement: (l to r) Mr Bridgman, Minister Ferrari and Mr Joseph (Photo: Patrick Joubert)
The Seychelles government and Petro Seychelles Ltd have signed an agreement with Adamantine Energy Ltd, an oil exploration company based in Canada, for oil exploration in our waters.
It’s been ten years of intense negotiations between Petro Seychelles Ltd and Adamantine Energy Ltd and the signing of the petroleum exploration agreement took place yesterday between the Designated Minister and Minister for Fisheries and the Blue Economy, Jean François Ferrari, the chief executive of Petro Seychelles Ltd, Patrick Joseph, and the chairman of Adamantine Energy Ltd, Craig Bridgman.
The signing was held in the conference room of the Ministry of Fisheries and the Blue Economy at Maison Collet.
Under strict environmental rules, the exploration and extraction of the hydrocarbon will take place on the southern shelf, 80km South East of Mahé, an area where oil exploration has been done before.
The oil reserve in the area is expected to be over 200 billion barrels.
Adamantine Energy Ltd has been granted 34 years to explore (9 years) and to extract (25 years) the oil found as per Petro Seychelles Ltd lease agreement.
As per the agreement, if oil is found, the country will benefit of 10% royalty on the first batch of oil extracted or 5% royalty on gas, in case of discovery. This will be followed later by a tax of 35% on profit made by the company after all expenses. In the event of the company becoming more profitable, additional taxes will be added.
The exploration will be carried out in an area of approximately over 9000 sq km and the company will pay US $10 as rent per sq km.
In addition, the company will also pay US $100,000 per annum as education bonus for training of local personnel.
Delivering a few words after the signing, Designated Minister Ferrari said that the signing is an important milestone for the country while we embark on an important journey to see what our Blue Economy can bring in terms of revenue and wealth creation.
He added that the agreement has come at a time when the whole world is having a new look at fossil fuel in terms of the pressure of the supply and cost of oil and gas due to the war between Ukraine and Russia, and that the moment has come for us to also contribute to the research effort and hopefully reap some financial benefits.
He stated that the agreement has taken on board all the necessary measures against the impact on the environment and that the world, other countries and organisations with expertise, do partner with us to make sure that we do what we do in the best way.
“Now that the agreement is signed, let’s go for it, let’s see what lies below our oceans, let’s move forward and let’s work for the benefit of the people of Seychelles. We are here to defend and protect and enhance the environment but we are here also to make sure that people have a decent life,” said Designated Minister Ferrari who noted that transparency in revenue collection for distribution will be of top priority.
With regard to protecting the environment, Designated Minister Ferrari said that it has been specified in the clause that if Petro Seychelles Ltd is not satisfied with the handling of the environment during the exploration or extraction process, the permission to continue with the operation further will be revoked.
He noted that there will be an environment impact assessment for every well before they are drilled.
Mr Bridgman said while many gas companies attempt to explore and sometimes stop after a year or two, Adamantine Energy Ltd has been very persistent in its quest to explore oil in our country to which discussions have gone well over 10 years on the overview by one of the company’s geophysicists of great energy potential in our offshore. He noted that this overview has raised the confidence that oil exists in our waters.
He commended the team from Petro Seychelles for being tough negotiators for our people to which the conditions are very favourable and fair to both parties and he also thanked the government for awarding Adamantine Energy Ltd the contract to explore and extract the oil.
“I hope this will bring energy independence to Seychelles, bringing innovations, jobs but I want everybody here to know that we understand the Blue Economy is a very very important part of Seychelles and we will make sure that it continues,” said Mr Bridgman, who noted that they will make the environment a priority along every step of operations.
For his part, Mr Joseph said that with the blessing of the cabinet of ministers, Petro Seychelles Ltd is happy to have concluded the agreement with Adamantine Energy Ltd. He thanked the company for its trust in energy potential in the country.
He said that through the accounting procedures in the agreement, Seychelles has the possibility to at every stage in the operation audit the accounts book and on top of that while we are a member of Extractives Industries Transparency Initiative (EITI) with the obligation to record all cash transactions for the benefit of the public, thus eliminating the risk of corruption.
With regard to the environment, Mr Joseph said that apart from the environment risk assessment that will be done periodically before each drill operation, the company has an onboard oil contingency and containment plan, in line with that of ours, which is to attack an oil spill as it happens to prevent it from spreading further in collaboration with other oil spill organisations in the region in case the spill gets larger.