INTERVIEW: Sierra Leone eyes 2025 oil spud, new NOC following bid round

Sierra Leone is on the cusp of handing nine exploration blocks to a major African independent as it looks to drum up interest in its estimated 44 billion barrels of oil resources, its hydrocarbons chief said.

In a wide-ranging interview with S&P Global Commodity Insights, Foday Mansaray, the director general of the African nation's Petroleum Directorate, said he was on a mission to "revive the sector" and "get companies in," with Sierra Leone set to officially form a national oil company within a month.

Sierra Leone is not currently an oil and gas producer but is looking to ride a wave of exploration success in its pocket of West Africa, with nearby Ghana, Cote d'Ivoire and Senegal turning oil exporters in recent years. Mansaray compared its basins to those in Guyana and Suriname.

It saw four discoveries through just eight wells in the 2000s, having seen exploration activity begin in the 1980s. Anadarko discovered light, sweet oil at its Venus-1, Mercury-1 and Jupiter-1 spuds, while Russia's Lukoil found oil at its Savannah-1X well. But none of the discoveries were deemed commercial and no new wells have been drilled since 2013.

"Our basin shows a working petroleum system," said Mansaray. "[But] we really haven't drilled enough wells over the years. In the past five or six years there was a downturn in the industry for various reasons, COVID, the crash in the oil and gas market."

The deadly Ebola epidemic in 2014 also deterred investors, he said, as did the energy transition narrative -- which caused Western funding for African oil and gas projects to dry up -- challenging deep-water economics and a lack of modern exploration technology in the 2000s.

Total oil in place is estimated by Sierra Leone's government to be 44 billion barrels, Mansaray said, with 15 billion-20 billion barrels recoverable. The oil is light and sweet, with an API of 35-42.

In 2022, the country launched its fifth licensing round for 56 blocks covering 63,000 sq km offshore, with three companies applying. FA Oil, a subsidiary of Nigeria's independent Famfa Oil Ltd., secured six oil blocks and is seeking to farm them out. Famfa holds a stake in the 100,000 b/d Agbami field.

Since the closure of the bid round late last year, PDSL has launched a phase of direct negotiations, which is due to end in September. The focus has been on smaller independent companies and National Oil Companies, Mansaray said.

"We got a solid bid from a major African independent which we are currently negotiating with. Hopefully, we'll make that announcement very soon."

PDSL is also re-processing legacy 2D and 3D seismic data with a number of companies expressing interest in studying it. Two supermajors have purchased geological data, Mansaray said.

With activity picking up, Mansaray said Sierra Leonian officials are "working toward a 2025 drill."

New NOC

Sierra Leone is also on the verge of establishing a National Oil Company, Mansaray said, with inauguration slated for the coming weeks. "We are at the last stage of the legalities. It is with our AG and ministry of justice ... I believe that should not take more than a month."

The new NOC will take stakes of 10% in all exploration licenses, Mansaray said, while the state's fiscal terms will make the government take around 25%-30%, subject to some negotiation. Contracts include stabilization clauses to protect investors against regime changes.

The country would also like to build a refinery to supply the local market, as part of its comprehensive oil and gas masterplan. Sierra Leone currently imports all its refined products, draining its foreign exchange reserves.

Refined product imports averaged 15,000 b/d in the second quarter, primarily from European refiners. "I am not of the mindset that we export all our oil. We need to be able to use it here, add value here, and any excess to export around the region," Mansaray said, to ensure local people benefit from the sector.

The senior official said he has a direct line of communication to President Julius Maada Bio, who was recently re-elected, meaning approvals can be swift and licenses negotiated and awarded in just 30 days. Mansaray will chair the board of the new NOC.

NJ Ayuk, executive chairman of the African Energy Chamber, praised Sierra Leone's openness to investment. "Sierra Leone has been proactive in attracting new investments and promoting opportunities within its hydrocarbon-rich basins," Ayuk said in a statement. "As a frontier market with a working petroleum system, the country offers both a unique and strategic opportunity for global E&P players seeking high returns."