Written by Chloe Marie – Research Fellow
The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by countries in northern Africa, including Tunisia, Morocco, Libya and Egypt, to develop policies specific to shale gas development. Last week’s article addressed relevant developments in Algeria.
In September 2015, the U.S. Energy Information Administration (EIA) issued a report stating that Tunisia holds approximately 22.7 Tcf of technically recoverable shale gas resources, which are located in the Ghadames basin in southern Tunisia. The report also noted that additional resources might exist in the Pelagian basin in eastern Tunisia. Shale gas development in Tunisia is still at an early stage, and the reserves have yet to be proven commercially viable. The Tunisian authorities, however, consider the reserves to hold a great deal of potential given the fact that conventional hydrocarbon production is in decline while domestic energy consumption is increasing.
Despite hydraulic fracturing having been used in the past for the development of conventional reservoirs, Tunisia has not had regulations specific to shale gas development using such technique. Thus, exploration and/or production of shale gas resources has been subject to the legislation applicable to conventional oil and gas activities, including the 2008 Hydrocarbon Code. In order to attract investment and create good business environments, the Tunisian government recently presented a draft proposal to the unicameral Parliament - also called the Assembly of the Representatives of People - amending the Hydrocarbon Code to address the terms and conditions for unconventional exploration and production. The Tunisian Parliament adopted the draft proposal in April 2017.
Nonetheless, even though shale gas development appears to be moving forward, the Tunisian people have demonstrated major opposition to such development expressing concerns about the potential impacts on the environment and the absence of public participation in the decision-making process. Opposition to shale gas development dates back to 2010 when the public discovered that the government had issued exploration permits for shale gas resources to Perenco Tunisia and Cygam Energy without transparency in the permit granting process. Indeed, the U.S. EIA revealed that Perenco Tunisia and Cygam Energy conducted well testing operations at shale gas reservoirs in southern and central Tunisia, but the government denied these allegations. In November 2012, the government issued permits to Royal Dutch Shell for shale gas exploration without any public involvement, again giving rise to controversy.
In 2014, the Tunisian government led a series of studies on the country’s gas extraction capability and recently announced, in January 2017, that it would further investigate the issue of the environmental impact of shale gas development in Tunisia. The results of this study are expected summer 2018.
The U.S. EIA has estimated the technically recoverable shale gas reserves in Morocco at approximately 12 Tcf located in the Tindouf – also known as the Zag basin – and Tadla basins, respectively in southern and central Morocco. In early 2015, Gulfsands Petroleum, a UK-based company, announced it discovered new reserves within the Rharb Centre Permit in northern Morocco. Just like Tunisia, Morocco has recently started to take more interest in the development of shale gas resources.
During the year 2010, the Moroccan Office National Bureau for Hydrocarbons and Mines (ONHYM) carried out preliminary work focused on the potential of shale gas development in Moroccan basin and the results were promising. Many foreign companies have expressed a great interest in exploring shale gas resources, including Anadarko Petroleum, Repsol, EOG, East West Petroleum Corporation, and Circle Oil, and acquired prospective permits from and in partnership with the ONHYM. Most of the companies conducted several geological studies and seismic surveys, however, in June 2015, the Irish explorer Circle Oil announced having reached a stabilized flow rate of 1.9 million cubic feet per day after drilling its well in the Lalla Mimouna permit area. This development encountered significant opposition from the local population due to concerns over the impacts of the use of hydraulic fracturing on already-scarce water.
Legally speaking, the Moroccan Hydrocarbon Code applies to both conventional and unconventional resources. There have been ongoing discussions, however, within the Moroccan government and the ONHYM to create a specific legal framework relating to shale gas development.
Libya is the fourth largest oil producers worldwide and a major supplier of oil and natural gas to the European Union. As a result of the 2011 uprising against the Al-Qaddafi regime, however, global oil and natural gas production and energy exports have decreased dramatically. In 2012, in hopes of reviving the Libyan hydrocarbon market, the National Oil Corporation (NOC) Chairman Nuri Berruien declared that “gas has never been a priority for us, but it is now” and acknowledged the need to explore options regarding shale gas development.
Shale gas deposits in Libya account for approximately 122 Tcf of technically recoverable shale gas and are located in three basins: the Ghadames basin in western Libya, the Sirte basin in central Libya, and the Murzuq basin in southwestern Libya. The U.S. EIA also reported the presence of potential shale gas resources in the Kufra basin; though they may not be recoverable.
At present, the Libyan government is still seeking foreign investments for shale gas exploration and production activities. Such activites have not yet started, primarily due to an unstable economic and legal climate. Interestingly, the NOC Exploration Manager stated in 2013 that “to have a petroleum law, you need to have a constitution first … You cannot have a law without a constitution.”
According to the U.S. EIA, Egypt holds 100 Tcf of technically recoverable shale gas in four basins, namely the Abu Gharadig, Alamein, Natrun and Shoushan-Matruh, all located in the western desert. Compared to Libya, Morocco and Tunisia, Egypt has made the furthest strides in the development of its shale gas resources. Royal Dutch Shell, together with Apache Corporation, successfully completed shale gas production tests from the Apollonia field in the western desert in June 2016. Furthermore, in December 2016, Apache Corporation announced it would invest $100 million into the drilling of 20 hydraulically fractured wells in the Apollonia field with the expectation of producing around 40 Mcf per day of natural gas.
Egypt does not have specific regulations regarding shale gas development; thus, such development is subject to the legislation applicable to conventional hydrocarbon resources, namely the Mining and Quarries Law No. 66 of 1953 and the Natural Resources Concession Law No. 61 of 1958.
Prior articles in the Global Shale Law Compendium series: