THE GAMBIA: GOTG ISSUES INITIAL OIL EXPLORATION

C O N F I D E N T I A L BANJUL 000583

SIPDIS

SIPDIS

SECSTATE PLS PASS OPIC, EXIM, USTDA; DEPT. OF ENERGY FOR
OFFICE OF POLICY AND INTERNATIONAL AFFAIRS

E.O. 12958: DECL: 09/19/2016
TAGS: EPET PREL PGOV OPIC EXIM USTDA GA CA
SUBJECT: THE GAMBIA: GOTG ISSUES INITIAL OIL EXPLORATION
LICENSE

REF: BANJUL 492 AND PREVIOUS

Classified By: AMBASSADOR JOSEPH STAFFORD, REASON 1.4 (B AND D)


1. (SBU) Local media have announced a September 8 agreement
between the GOTG and a Canadian oil company, Buried Hill
Energy Company (BHEC),whereby the latter obtained an oil
exploration license covering two of six blocks in the
GOTG-designated offshore exploration zone. Issuance of the
exploration license followed the December 2005 signature of a
MOU between the GOTG and BHEC (reftel). In September 19
conversation with Ambassador and Poloff, recently-appointed
Petroleum Commissioner Fafa Sanyang stated that, under the
terms of the license agreement, BHEC is required to begin
drilling within two years. He expressed hope that the
agreement with Buried Hill would encourage other foreign
firms -- American, in particular -- also to seek exploration
licenses for the remaining available blocks.


2. (C) COMMENT: The GOTG has now issued its initial
exploration license; previously, its efforts in recent years
to elicit Western and other foreign companies' interest in
development of The Gambia's oil resources had failed to bear
fruit. U.S. oil firm reps had explained their hesitancy to
pursue exploration here in terms of uncertainty over the
actual extent of those reserves coupled with what they
claimed was the GOTG's unwillingness to offer sufficient
incentives to entice them to bear the heavy costs involved in
deep water drilling for an unknown payoff. The agreement
with BHEC -- which previously conducted a seismic study of
the offshore area concerned -- suggests that the GOTG finally
decided to offer the incentives that the firm required to
commit to exploration. END COMMENT.
STAFFORD