Oil Hunted in Mozambique After World’s Largest Gas Finds

Statoil ASA and Tullow Oil Plc are completing a well in search of the first commercial oil discovery off Mozambique, the East African country where explorers have made the century’s largest natural gas finds.

The partners are drilling the Cachalote well past potential gas fields and looking for crude discoveries further under the seabed, Tullow Exploration Director Angus McCoss said yesterday in an interview. The well is expected to be finished this month.

“We think that some of the deeper plays” may have oil, McCoss said. “That’s what the focus of that campaign is in trying to find the elusive oil offshore East Africa.”

Anadarko Petroleum Corp. and Eni SpA have found more than 100 trillion cubic feet of gas off Mozambique, enough fuel to build the world’s second-largest liquefied natural gas plant. Oil, which explorers prefer because it’s easier and cheaper to ship to customers, has been harder to find. In 2010, Anadarko’s Ironclad well showed evidence of oil without making an economically viable discovery.

“The value lies in oil,” McCoss said in London. Drilling at Cachalote is “a potentially needle-moving prospect.”

Tullow and Statoil are the first companies to drill the Ibo High area at the bottom of the well, he said. The prospect may be part of one of the largest structures mapped off the East African coast.

Frontier Area

The partners are targeting about 200 million barrels of oil at Cachalote, Tom Robinson, a London-based analyst at Nomura International Plc, wrote in a June 3 report. The well, located in Area 2 to the south of Mozambique’s gas finds, is scheduled for completion this month, Tullow said on May 8.

“This is the first exploration well in this area, so it’s a frontier area,” Baard Glad Pedersen, a spokesman for Statoil, said by phone. “It has a potential for oil, but we are in the early phase.” Statoil operates the well.

After Ironclad, Anadarko drilled the Barracuda and Black Pearl wells in the south of Area 1 last year, Chief Financial Officer Robert G. Gwin said Feb. 5. Both were unsuccessful.

Eni, exploring Area 4 off Mozambique, also plans to drill for oil in the second half, Claudio Descalzi, head of exploration and production, said March 14.

“We going to start a new exploration campaign with the first well that will be drilled in July,” he said. “It’s in different kind of environment, different target and mainly oil, so that is quite important.”

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