LONDON - Royal Dutch Shell Plc agreed to buy up to 45 percent of explorer Tullow Oil's licence offshore French Guiana, boosting hopes rich West African oil reservoirs could be replicated across the Atlantic. The companies said in statements on Wednesday that Shell had agreed to purchase 33 percent of the Guyane Maritime Permit, around 150 kilometres off the coast of French Guiana, for an undisclosed sum, and had an option to buy another 12 percent.
Tullow bought a 97.5 percent interest in the licence hoping that big oil finds it made offshore Ghana, including its Jubilee field, would be repeated off the South American coast, due to geological similarities between the areas. It's an endorsement of the likelihood of the Jubilee play extending across the Atlantic, Angus McCoss, head of exploration at Tullow told Reuters in a telephone interview.
Analysts at Collins Stewart have put a net asset value of around 140 million pounds ($234.4 million) on the block.
Africa and South America separated tens of millions of years ago and the shared history has long excited oil geologists.
In recent years, Brazil has found tens of billions of barrels of oil in offshore reservoirs that were formed when the two continents were attached.
Tullow believes the Jubilee field contains up to 1.8 billion barrels of oil and that a recent discovery offshore Sierra Leone means similar fields could be located along the west African coast.
McCoss said Tullow was in negotiations with another party about buying another share in the French Guiana block and hopes for a deal by year end. The company is conducting a seismic survey and hopes to drill an exploration well late next year.
Keith Morris, oil analyst at Evo Securities said Shell may have agreed to pay for the cost of surveys and drilling as part of the deal.
London-listed Northern Petroleum (NOP.L) has a 1.25 percent interest in the block.
French Guiana is an Overseas Department of France, which means it has the same political status as parts of mainland France.
The former penal colony on the norheast coast of South America is a similar size to Austria and has a population of 216,000, most of whom have African ancestry.
The European Space Agency launches its rockets from a site in the territory.
McCoss added that Tullow was making good progress on the sale of part of its interests in Uganda. He said Tullow hoped to have indicative bids for up to half Tullow's stake in the Lake Albert Rift Basin by the end of the year and to select a buyer early in 2010.
Collins Stewart has a net asset value of 1.4 billion pounds on Tullow's Uganda assets.
Shell shares were up 1.73 percent at 1,887 pence at 1001 GMT, while Tullow traded down 1 percent at 1,257 pence lagging a 0.6 percent rise in the DJ Stoxx European oil and gas sector index .SXEP. ($1=.5973 Pound)