Hydrocarbon Potential Of The Eritrean Red Sea and Exploration Opportunity By

1. Hydrocarbon Potential Of The Eritrean Red Sea and Exploration Opportunity By Mohammedberhan Abdulkadir

3. Basic Facts

4. Geological Summary of the Eritrean Red Sea Tectonic Evolution: - Major Rifting in the Red Sea began about 25 - 30 Ma (Mid to Late Oligocene) -Rifting was Transtensional and involved block faulting with both normal and strike-slip faults, which generally trend NW-SE to NNW-SSE. - By the Late Miocene - Early Pliocene, about 5 Ma ago, the small pull-apart basin developed oceanic crust.

5. Geological Summary of the Eritrean Red Sea

6. Geological Summary of the Eritrean Red Sea 2.2- STRATIGRAPHY AND SEDIMENTATION: • Post-rift units: deposited after major rifting had ceased outside the axial trough. • Syn-rift units: deposited during the major rifting of the Red Sea. • Pre-rift units: deposited before the major rifting.

7. HYDROCARBON POTENTIAL OF THE ERITREAN RED SEA • Conclusive proof for the existence of hydrocarbon generating system :- • - Oil and Gas seep on and around Dahlac Island; • - Oil impregnated sands on Defnein Island and the Red Sea coastline; and • - Oil and Gas shows in the wells.

8. HYDROCARBON POTENTIAL OF THE ERITREAN RED SEA • The 55-day blowout of well C-1 occurred at 9865´ is the most important occurrence in the Eritrean Red Sea.

9. PETROLEUM SYSTEM OF THE ERITREAN RED SEA • Source rock - Recent wells encountered alternating layers of salt and shales which are high quality source rocks within the post-rift sediments (Desset Formation). -Results of rock eval analysis revealed several organic rich horizons in a number of offshore Eritrean wells in both syn-rift Habab and Amber Formations (fair to good TOC). -Pre-rift potential source rocksincludethe Late Jurassic organic rich shales and marls of the Antalo Limestone and Agula shale.

10. PETROLEUM SYSTEM OF THE ERITREAN RED SEA • Maturity: • Geothermal gradient varies from 2.56 °C/ 100m in Du Rig Rig #1 well to 6.18 °C/ 100m in well Secca-Fawn. • Regionally, geothermal gradient shows a tendency to increase from the Red Sea rift margins to the Axial Trough.

11. PETROLEUM SYSTEM OF THE ERITREAN RED SEA • Reservoir Pre-rift: • fluvial sandstones of Cretaceous Amba Aradom sandstone. • fluvio-deltaic to shallow marine sanstones of Jurassic Adigrat sandstone, • fluvio-glacial sandstones of Paleozoic Enticho sandstone, • Post-rift: • The transgressive Desset Formation contains continental sediments near its base. They have good interpreted porosity. • Syn-rift: • Potential syn-rift reservoirs occur both in the pre-salt Habab and Dogali Formations and in the salt-bearing Amber Formation.

12. PETROLEUM SYSTEM OF THE ERITREAN RED SEA • Seal - For pre-rift reservoirs Agula shale, the Upper Habab (silt and shales) and where the pre-rift succession has been intensively eroded the Upper Miocene evaporites can be good seals.

13. PETROLEUM SYSTEM OF THE ERITREAN RED SEA • Seal (continued) - Amber salt can provide good seal for the underlying Habab and intra-salt sand lens reservoirs. - Upper Desset Formation could serve as seal for Upper Amber and Lower Desset Formations. - The reef buildups in the Dhunishub Formation are also important seals.

14. PETROLEUM SYSTEM OF THE ERITREAN RED SEA • Trap Types - Tilted fault blocks,rotated fault blocks, horsts and compactional drape are the most likely traps in both the pre-rift and syn-rift pre-salt units. - Structures related to the salt tectonics such as rollover anticlines, ramp anticlines, stratigraphic pinchouts, turtlebacks, salt diapirs and salt canopies or pillows prevalent in the salt basin are principal style traps for the post-rift units.

15. PETROLEUM SYSTEM OF THE ERITREAN RED SEA Schematic cross-section showing play types of the Eritrean Red Sea.

16. 5- SUMMARY OF PETROLEUM EXPLORATION HISTORY IN THE ERITREN RED SEA • The Eritrean Red Sea aroused hydrocarbon interest because of the long known oil seeps on the coast near Massawa and offshore close to the islands of the Dahlac Archipelago. • The hydrocarbon exploration history of the Eritrean Red Sea goes as far back as early 1920´s when the Italian firm, SOCIETA MINERARIA DEL AFRICA ORIENTALE, undertook the drilling of a well to few hundred meters depth.

17. 5- SUMMARY OF PETROLEUM EXPLORATION HISTORY IN THE ERITREN RED SEA • To date the following exploration activities were carried out over the 125,000 km2 area of the Eritrean Red Sea: • - 11 deep and 11 shallow wells were drilled; • - More than 40,000 line km 2D seismic data had been • acquired; • - Considerable portion of the Eritrean Red Sea had been covered with gravity and Magnetic surveys.

18. 6- Major Provisions of Model Production Sharing Contract 1- Terms of the Contract The Contract Term consists of :- - Exploration Period:up to 4 years with up to 4 years extension. - Development and production Period:up to 25 years with up to 10 years extension.

19. 6- Major Provisions of Model Production Sharing Contract • 2- Work Program • Minimum work program and expenditure obligations for each exploration period are negotiable.

20. 6- Major Provisions of Model Production Sharing Contract 3 - Profit Oil Split - Negotiable, set on sliding scale calculated in calendar quarter on cumulative basis. 4- Cost recovery - Negotiable, sliding scale of daily production.

21. 6- Major Provisions of Model Production Sharing Contract 5- Royalty - Negotiable, sliding scale of daily production. 6- Income Tax - Thirty-five percent (35%). 7- Gas Provisions - Good faith negotiations on gas discovery.

22. 6- Major Provisions of Model Production Sharing Contract 8- Customs A Contractor is entitled to import machinery and equipment necessary in operations, free of import duties, taxes, and imposts of any kind. 9- Export A contractor is entitled to export petroleum produced free of export duties, taxes or imposts of any kind. 10- Foreign Exchange Control: A Contractor can retain or dispose any funds out side Eritrea.

23. 6- Major Provisions of Model Production Sharing Contract 11- Stabilization Clauses and application Laws: - The contract shall be construed under, governed by and interpreted in accordance with the laws of the State of Eritrea as of the effective Date. - Economic benefit to be adjusted if affected by promulgation of new laws and/or regulations of Eritrea. - The capital expenditures of the Contractor as reflected in any facilities, discovered reserves, property, shall not be nationalized or confiscated, attached, seized, frozen, expropriated, or put under custody with out due process of law.

24. 6- Major Provisions of Model Production Sharing Contract 12- Resolution of Dispute: Any dispute, to the extent possible, will be resolved through negotiations. In the event the dispute is not settled through negotiations, it will be settled through binding arbitration. 13- Assignment: A Contractor can assign all or any part of his rights and interests to any technically and financially capable other person with the written consent of the Minister.

25. Map showing constitution of blocks in Eritrea.

26. HYDROCARBON EXPLORATION OPPORTUNITIES IN THE ERITREAN RED SEA Towards this end, The Ministry of Energy and Mines has announced an invitation to all interested International Oil Companies to apply for a Production Sharing Contract on near and offshore acreage in Eritrea.

27. Thank You for Your Attention A NEW COUNTRY OF ENORMOUS OPPORTUNITIES AND PROMISING FUTURE