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As i mentioned many a time, it's all been very much about the gas for me. It's a major stage towards a carbon neutral world.
It's half the carbon output of coal and 25% less than Diesel.
Coal has already started to reduce and not everything will end up on renewable energy due to cost and practicality.
Gas demand can only rise.
Let's not forget that if the SM's want gas only, then they will get the 12.9 TCF (OGIP) of which 9 TCF is recoverable listed in FRR's website. However, if they want both oil and gas, then the gas available to them increases to 30 TCF of reserves, as most of the gas in Block 12 is in the Eldari B and it's associated gas. Therefore, if they want the much larger deposit they have no choice about accepting the oil as well. Furthermore, the 202 TCF will also contain recoverable gas that won't be classed as reserves with today's prices, but with decades of extraction from Block 12, will be in the future.
IMHO the SM's are interested in the oil and I think it is nonsense to think otherwise. Block 12 contains some of the best quality oil on the planet, which is also some of the cheapest to extract (see my post from the 8/11/18 below copied from the Frontera Resources link P2 at the bottom of the post).
FRR's sweet crude of 41.5 API would be to the right of Brent and WTI on the chart in the link below. In fact only the Algerian Sahara Blend and the Malaysia Tapis are of higher quality looking at the chart. Top quality oil that can be extracted for less than $12/bbl, no wonder the super majors are interested.
https://www.energyandcapital.com/resources/brent-vs-wti-crude-oil-what-is-the-difference/17
Then factor in the future oil prices and the fact that Block 12 will produce for decades (see my post from the 12/11/18 below copied from the Frontera Archive link P3 at the bottom of this post).
Future oil prices
Oil Price forecast 2025 and 2050
By 2025, the average price of a barrel of Brent crude oil will rise to $85.70/b (in 2017 dollars, which removes the effect of inflation). By 2030, world demand will drive oil prices to $92.82/b. By 2040, prices will be $106.08/b (again in 2017 dollars). By then, the cheap sources of oil will have been exhausted, making it more expensive to extract oil. By 2050, oil prices will be $113.56/b, according to Table 12 of the EIA's Annual Energy Outlook's Reference Tables. The EIA has lowered its price estimates from 2017, reflecting the stability of the shale oil market.
https://www.thebalance.com/oil-price-forecast-3306219
While a lot can happen to alter the price of oil, hence the recent volatility in the market, diminishing cheaper oil reserves bodes well for FRR's cheap sweet crude.
Finally, if the SM's don't want oil why did BP buy oil that's not of as good quality as Block 12; costs less than $50/bbl compared to Block 12's less than $12/bbl; and only as recent as last year, when the meeting was with Zaza? IMHO the SM's wanted the oil, but just wanted to negotiate a better price.
https://www.lse.co.uk/chat/general/commodities-and-mining/frontera-archive-41C7D130-7E51-4344-82E7-83B697F53322.html?page=2
https://www.lse.co.uk/chat/general/commodities-and-mining/frontera-archive-41C7D130-7E51-4344-82E7-83B697F53322.html?page=3
Your below is what zaza originally stated to us at a meeting. We do the oil and a deal with the majors on the gas.
"IMO the majors are not interested in the oil and are only interested in the gas. Replace well with wells and a jv/farm in is only dependant on timescales. Given that 2027 has already been agreed a further time extension is just a matter of a bit of horse trading. I am fully aware that this info has come from a google translate of a local Georgian rag but I’m very optimistic about the next few months. Madp do your magic on the numbers please. #GLAdimnotashorter"
Madp I need your help here please.
A re-work oil well is about $3M and so in 7 years costs could easily be recouped and a healthy profit taken.
However a brand new gas well is much more expensive c. $25M so given the timescale for cost recuperation and to generate a healthy return for investment it seems to me that a longer contract is required to satisfy all parties.
IMO the majors are not interested in the oil and are only interested in the gas. Replace well with wells and a jv/farm in is only dependant on timescales. Given that 2027 has already been agreed a further time extension is just a matter of a bit of horse trading. I am fully aware that this info has come from a google translate of a local Georgian rag but I’m very optimistic about the next few months. Madp do your magic on the numbers please. #GLAdimnotashorter