Even though the oil discovered in the Jethro and Joe wells at the Orinduik block turned out to be heavier than expected, one of the partners of the offshore license, Eco Atlantic, is convinced that the attractiveness of the find has increased given the narrowing supply from Venezuela.
Addressing this issue during an interview with Proactive Investors, one of the UK’s leading sources of financial news, was Eco Atlantic’s Chief Executive Officer (CEO), Gil Holzman.
The CEO reminded that the sanctions imposed by the USA have narrowed the supply of oil from the Spanish speaking South American country. In fact, international media outlets reported two days ago that oil tankers carrying at least 18.1 million barrels of Venezuelan oil are idling at sea across the world as a result of being unable to find buyers. Holzman noted as well that some Iranian oil fields have shut down and there is a decline in Mexico’s production too. In light of this, he noted that the oil in the Jethro and Joe wells have more appeal.
The CEO said, “…The outlook for (heavy) oil going from 2024 onwards is very promising. Many Gulf Coast and European and Chinese refineries are very thirsty for this kind of heavy oil and we see a narrowing supply due to the sanctions on Venezuela…We therefore forecast that the price for heavy oil will get better and better.”
In terms of assessments, Holzman said that the partners, Tullow and Total included, have to assess two main ingredients on determining the way forward for Orinduik’s oil. The first ingredient he said is the ability to actually produce the oil and the second relates to the commercialization of the asset.
Holzman said, “…From both aspects, we see very positive indicators. In terms of its producibility, all the reservoir ingredients are very positive, the permeability and porosity are high. We have an overpressure in the reservoir and the temperature is high. It is now 94 degrees Celsius and that means the oil is mobile and the potential is there for it to flow to produce.”
In terms of the economics, Holzman said he expects the forecast to improve based on the market conditions he earlier explained with Venezuela. When the two ingredients are put together for analysis, Holzman said that the partners will determine CapEx and OPEX along with getting a good price.
He concluded, “One thing I can tell you for sure is that no one can write off these oil discoveries. It’s like you have a diamond, some diamonds are flawless, and others are flawed but still, they are worth a lot of money…”