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Why Oil Is Still Underpriced

Why Oil Is Still Underpriced

Oil prices are pulled in…

Oil India Ltd Strikes Oil in Gabon

State-owned Oil India Ltd (OIL) has announced its first oil strike in Gabon. OIL’s Lassa-1 well is in the onshore bloc Shakthi (G4-220), which OIL leased from the government of Gabon for exploration in April 2006 after forming a joint venture. OIL has a 45 percent share in G4-220, as does partner Indian Oil Corporation Ltd, with Singapore based Marbis holding the remaining 10 percent stake. OIL is also the operator. A senior OIL executive told Calcutta’s The Telegraph newspaper, “This is a new chapter in the history of OIL.”

The OIL executive continued, “The locations, which were released by the Gabon government in mid-December 2011, were staked in deep forest where there was no communication. OIL personnel had to walk several miles inside the dark and deep forests. Operation in Lassa-1 started on May 19 and the final depth, 6,700 feet, was reached on June 29.”

The find is good news for Gabon, whose oil production peaked in 1997. Since then Gabon’s oil output has declined by one-third, as the country’s large oil fields have matured, causing Gabon to fall from being Sub-Saharan Africa’s third largest oil producer to sixth place. Oil is critical to Gabon's economy, accounting for 65 percent of government revenue and 75 percent of export revenue, according to the African Economic Outlook.

The G4-220 concession bloc is nearly 50 miles long and 28 miles wide and is situated roughly 155 miles from Gabon’s capital Libreville. After the joint venture secured the concession in April 2006, aeromagnetic and seismic surveys were carried out in December 2011. The joint venture’s total allocated budget for carrying out exploration in the The G4-220 concession bloc is $97.5 million. According to OIL, the Lassa-1 well has recorded a flow of crude oil at the rate of 220-225 barrels per day and natural gas at the rate of 4,330 standard cubic meters per day.

By Charles Kennedy of Oilprice.com



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  • G.K.Bhattacharya on August 03 2013 said:
    Great effort by an Indian PSU, considering the infrastructural constrains.

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