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Oil, Gas Drilling Activity Slips in the U.S.

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Chevron and Genel Energy Hunt for Morocco's Giant Oil Deposits

Recent huge oil and natural gas discoveries along Africa’s western coast, such as the Jubilee field in Ghana which is estimated to hold around 600 million barrels, have attracted oil companies to the area in the search for similar such finds.

After decades of successful drilling in Angola and Nigeria, companies are now beginning to explore Morocco and Mauritania to the north and Namibia to the south.

Chevron (NYSE: CVX) and Genel Energy (GENL.L) are just two of the companies that are searching for a giant oil field in Morocco, hoping that such a discovery in a frontier country will send their market value soaring.

Laura Loppacher, an analyst at Jefferies Group Inc., said that “Morocco has seen a huge explosion of interest in the last six months. It’s an area with several plays for people to target, but it’s still frontier and risky.”

Related article: Angola and Ghana: West Africa's New Gems

One of the major attractions that draw companies to Morocco as opposed to other African countries is its relative stability, as demonstrated during the Arab Spring revolts. Drillers in the country also benefit from a ten year tax holiday, and a tax structure which only takes 30% of the petroleum income which according to Michael Alsford of Citigroup, makes it one of the most favourable tax structures to oil companies.

Larry Bottomley, the CEO of Chariot Oil & Gas (CHAR.L) (one of the smaller companies exploring in Morocco), stated that “the fiscal terms are close to the most attractive in the world.” Although he did admit that they “will probably get tougher after discoveries.”

By. Charles Kennedy of Oilprice.com



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