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Australian operator gives up on Timor-Leste, killing off oilfield redevelopment prospects

Upstream - July 25, 2023

Amanda Battersby, Singapore – Australian independent Carnarvon Energy has exited Timor-Leste, effectively drawing a line on any redevelopment of the Buffalo oilfield that until only recently some reports had claimed was still targeting the final investment decision in 2023.

Carnarvon on Monday confirmed it had relinquished the 100%-held TL-SO-T-19-14 production sharing contract offshore Timor-Leste, which hosts the Buffalo discovery.

"The company has also commenced the process to wind-up its Timor-Leste subsidiary," added Carnarvon.

The operator is understood to have become disheartened after the disappointing Buffalo-10 appraisal well, which was completed early last year. Wireline logging operations this well determined the previously announced discovered oil column "to be residual and uncommercial".

Carnarvon had hoped that success at Buffalo-10 would spur redevelopment of the Buffalo oilfield that Nexen Petroleum had shut in, back in 2004.

The field was originally discovered in 1996 by BHP and came on stream three years later before reaching production rates of up to 50,000 barrels per day.

However, output had fallen to about 4000 bpd by the time it was shut in, having produced approximately 20.5 million barrels of oil in total.

Recoverable volumes

Before drilling, Carnarvon had placed the mid-case recoverable volumes at Buffalo at 31 million barrels on a gross best estimate contingent resource basis, believing there was a "strong likelihood Buffalo-10 will confirm a sanctionable development project based on the minimum economic field size".

The well was drilled to a total depth of about 3500 metres by Valaris' jack-up rig JU-107 to test the presence of an attic oil accumulation that remained after the Buffalo field was shut in.

However, only residual oil was encountered, and the Buffalo-10 appraisal well was plugged and abandoned.

The co-venturers then evaluated the well's results before the operator decided not to extend the Buffalo PSC, and the licence lapsed on 27 May 2022, confirmed former partner Beacon Energy.

Carnarvon had already considered redevelopment options for the field including a wellhead platform connected to a floating production, storage and offloading vessel, and a mobile operating production unit connected to a floating storage and offloading vessel.

UK-listed independent Advance Energy, since renamed Beacon, in April 2021 had acquired for U$20 million a 50% equity interest in Carnarvon's Timor-Leste subsidiary, Carnarvon Petroleum Timor Unipessoal Lda, that held the Buffalo PSC.

By the end of April last year, Beacon had written off its entire US$19.834 million impairment relating to its Buffalo investment.

Source: https://www.upstreamonline.com/finance/australian-operator-gives-up-on-timor-leste-killing-off-oilfield-redevelopment-prospects/2-1-149053