BP Joins Oil Rush in the Namibia

OIL giant BP has entered the oil rush in Namibia by clinching 25 per cent of the equity in Chariot Oil & Gas’ exploration license in the orange Basin.

The transaction, announced yesterday, is in the form of a farm-out agreement and was conducted through Enigma Oil & Gas Exploration, a wholly-owned subsidiary of Chariot. The new share structure of Block 2714A is Petrobras, as operator, with 50 per cent, with BP and Chariot sharing the remaining interest.

The partners hope to strike an estimated nine billion barrels of oil.

In terms of the contract, BP will pay for Chariot’s cost of drilling the first exploration well, scheduled for 2012. In addition, BP will cover past costs incurred.

Commenting on the latest farm-out agreement, Chariot chief executive, Paul Welch, said BP’s “global expertise of deep water exploration and related petroleum systems is exceptional”, and that its role in the oil hunt will be “invaluable”.

“It has been a key strategic objective for us to farm down our assets to facilitate exploration drilling, retain capital and mitigate risk,” Welch said.

Block 2714A lies in the Orange Basin offshore Namibia and stretches over more than 5 000 square kilometres. The Nimrod prospect, the largest of Chariot’s prospects.

Welch said funds received and retained through the BP deal will be used in further exploration and appraisal work.

Besides its interest in the southern block, Chariot also holds exploration licenses in the Namibe Basin north of the Walvis Ridge, as well as central blocks straddling the Lüderitz/Walvis Basins.