French Guiana find seen as Latam oil "game-changer"

Tue Oct 25, 2011 7:42pm GMT

* Analysts believe could herald big new offshore oil area
    * Hopes that northeast South America "mirrors" West Africa
    By Pascal Fletcher
    MIAMI, Oct 25 (Reuters) - A recent oil discovery off French
Guiana on South America's northeast shoulder is a potential
"game changer" for the region, boosting hopes it can replicate
West Africa's oil bonanza, experts said on Tuesday.
    Speakers at a Latin American oil and gas conference in
Miami made a point of highlighting the deepwater find announced
last month by London-based explorer Tullow Oil (TLW.L: Quote) in its
offshore Zaedyus well in the French overseas territory.
    Excitement about the Zaedyus oil strike has been magnified
by the fact that Tullow has made major discoveries across the
Atlantic off Ghana in West Africa's Gulf of Guinea and believes
the geology there is replicated in northeast South America.
    This "mirror image" theory is based on the view that
Tullow's Ghana and French Guiana finds are tapping into the
same ancient rock formations laid before Africa and South
America separated millions of years ago.
    "We have potentially another world class (oil producing)
province in Latin America" said Alirio Parra, a former
Venezuelan oil minister and director and senior associate of
the CWC group, which organized the oil and gas conference.
    "The two pieces fit almost perfectly," Parra added.
    RoseAnne Franco, an upstream research analyst with Wood
Mackenzie, said the fact Tullow was citing six additional
prospects off French Guiana with a similar make-up to Zaedyus
suggested major potential in the coastal area extending from
Guyana through offshore Suriname and French Guiana and into
northeast Brazil's maritime area.
    "It's a potential game-changer -- in the sense of the size,
that you have an area with such immense prospects," Franco told
Reuters after speaking at the conference.
    Oil exploration had been carried out previously off
Suriname and Guyana, but this had been relatively limited.
    "So I think there's still uncertainty, but what you see
under way in offshore French Guiana would suggest that the
Equatorial Margin has enormous prospects," Franco added,
referring to the new deepwater exploration frontier that
focuses on northeast Brazil.
    In the past decade, fields with tens of billions of barrels
of oil have been found offshore Brazil in reservoirs that were
formed when Africa and South America were attached.
    Parra said the French Guiana discovery came amid increasing
exploration activity in Latin America, when governments were
looking to expand their energy resources and were finding a
willing investment partner in commodities-hungry China.
    "Asia is looking for energy security. Latin America is
looking for energy markets," Wood Mackenzie's Franco said.
    The Zaedyus well in French Guiana was drilled in more than
2,000 metres of water and at a cost of some $200 million,
    Tullow was operating the Guyane Maritime license with a
27.5 percent stake along with partners Royal Dutch Shell Plc
(RDSa.L: Quote), with 45 percent and France's Total (TOTF.PA: Quote) with 25
percent. Northpet -- a company owned by Northern Petroleum and
Wessex Exploration -- has a 2.5 percent holding.
    Europe's largest listed explorer by market capitalization,
Tullow had plans to drill exploration wells too in neighboring
Suriname and Guyana.
    "Moving forward, I think interest is going to heighten
substantially," Franco said, adding she believed the offshore
French Guiana oil find had been under-reported so far.
 (Editing by Sofina Mirza-Reid)
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