Seychelles plans to revamp its model petroleum production sharing agreements before inviting oil and gas companies to bid for exploration licences from May 2013, an energy official said.
East Africa has become a hotbed of exploration after oil discoveries in Uganda and Kenya, as well as natural gas finds in Tanzania and Mozambique. Seychelles is attracting interest.
"Many firms have approached us but they will have to wait until after April to submit their proposals," Eddy Belle, chief executive of upstream regulator PetroSeychelles, said.
"By then we will have put in place the few pieces of legislation required to modernise our model petroleum agreement and the new fiscal regime," he told Reuters in an interview.
"We will not have a licensing round per se. The way we will do it is: after April 2013, oil companies can come in at any time and provide a proposal for an area," Belle said.
Belle did not comment on the details of the planned changes in oil laws but another government official, who did not wish to be named, said they would probably include an increase in royalties to 10 percent of petroleum revenue from 5 percent.
The source said there may be room for companies to negotiate a reduced royalty if the new charge made exploration unviable.
So far, Afren Plc and Australia's WHL Energy are the only companies holding exploration licences in Seychelles, an archipelago of islands in the Indian Ocean northeast of Madagascar. A few others have expressed interest.
Belle said that after April, once a company had approached the government for an exploration area, other interested ones would have up to 90 days to submit bids for the same block.
After the 90 days expired, the government would evaluate and award the exploration area to the company that showed it had the financial capability to conduct exploration and then go into production if it struck commercial quantities of oil.
"We are talking about companies which will have to start with exploration and if they are successful they will move on to exploitation," Belle said.
Belle said WHL Energy was still looking for a partner but was committed to drilling, while Afren had completed a 3-D seismic survey covering 3,350 square km and was now processing the data and identifying a drilling location.
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