Operations
CYGAM OPERATIONS:
TUNISIAN PERMITS:
Tunisia
Management believes the existing exploratory permits in Tunisia have excellent potential for the future growth of the Company. Tunisia, like Italy, has been neglected by most large multinational oil and gas companies, partly because of a preconceived assumption that no giant oil and gas fields could be found there due to the country’s small size, compared with neighbouring Algeria and Libya.
Although the smallest of the main oil producing countries in North Africa, Tunisia offers, in contrast to its neighbours, a politically stable environment and an attractive investment climate in its petroleum sector. The government, the national oil company (ETAP) and the Department of Energy (DGE) encourage foreign participation in oil and gas exploration and production. As a small oil producer, nestled between Algeria and Libya, the country occupies a strategic position and is close to major European markets.
Most of Tunisia’s production is from five major fields, El Borma, Ashtart, Miskar, Ezzaouia and Sidi El Kilani. The country currently produces 111,000 boepd, comprised of 71,000 bopd and 240 MMcfpd. A network of oil and gas pipelines covers the country linking fields with ports and urban centres. Crude oil from the Saharan oil fields of Tunisia (El Borma, Chouech Es Skhira, Adam and Makhrouga / Larich / Debech) is delivered through a spur line via Zarzaitine (Algeria) to the La Skhira terminal. This 24-inch pipeline transports oil from the Algerian oil fields to La Skhira terminal in the Gulf of Gabes. In addition, since 1972, gas has been delivered from El Borma to the Gulf of Gabes via a 10.75-inch pipeline. Additionally, two 48-inch Trans-Mediterranean pipelines transect the country and transport gas from Algeria to Italy via Tunisia.
Tunisia has hardly been explored as compared to Alberta: only 541 wells were drilled from 1932 to 2005, of which ten were drilled in 2005. Vast permits of over one million acres may have just a few wells drilled to test their potential.
The national oil company, ETAP, has the right to participate in the development of new discoveries to the extent negotiated in each contract. ETAP is carried through the initial exploration and appraisal phase and will repay its share of past costs through its share of production. ETAP typically negotiates a 55% share in most agreements, but recently has sometimes reduced its share to 50%. As in Italy, access to existing well and seismic data outside a granted permit is not readily available and operators have to resort to exchanging or buying information from other operators in order to generate basic geological maps.