International Highlights

??Latin America had seven of the 10 largest oil and gas discoveries in 2008 including three gigantic fields in Brazil’s Santos Basin that may hold billions of barrels of oil. According to IHS Inc., recent gas finds in Peru and Bolivia are bigger than the seventh-, eighth-, and ninth-largest oil finds this year in Iran, Australia and Egypt, respectively.

Latin America, however, is still an area of uncertainty. Petrobras estimates that about $400 billion is needed for Santos Basin development and that production is economically feasible if oil is $50 a barrel. Falling oil prices and social, economic, and legislative issues challenge Brazil.

Major oil companies had important Venezuelan projects until Venezuela’s Hugo Chavez government changed contract terms and gave more control to the country’s national oil companies. Similar changes recently occurred in Ecuador and Bolivia—both countries changed contract agreements, discouraging investment by international oil companies.

Although Colombia, Argentina and Mexico are politically more stable, reserves in both countries have been rapidly declining. Mexico recently passed legislation to address exploration financing, and to grant Pemex control of its financial well-being and the ability to invite companies to bid on tracts and award contracts directly.

1 Canada
Corridor Resources of Halifax, Nova Scotia, has struck oil at an onshore site in New Brunswick, Canada. According to IHS Inc., the company reported that its #G-36 South Branch exploration well, located three kilometers southeast of gas production at Corridor’s McCully Field, flowed 59 bbl. per day of 45-degree API oil. Additional tests are planned to explore 102 ft. of potential oil pay previously thought to be gas pay. In January, Corridor planned to drill an appraisal well on the find, which it has named the Caledonia discovery.

2 Algeria
London-based Gulf Keystone Petroleum Ltd. completed drilling and testing of #HBH-5 appraisal well on the Hassi Ba Hamou Permit (HBH Permit) in Algeria. The #5 HBH well reached a total depth of 928 meters and penetrated a Devonian-age gas reservoir. During a production test, a stabilized flow rate of 9.5 million cu. ft. was achieved through a 96/64-in. choke. The drilling rig will now move to drill appraisal well #6 HBH, the last of the initial prospects on the HBH Permit. No further announcement on #6 HBH is planned until the well has been completed. The HBH Permit comprises five blocks within an area of approximately 7,000 square miles in the Bechar Basin in Algeria’s Western Desert.

3 Libya
The Libyan national oil company NOC and partner Arabian Gulf Oil Co. (AGOCO)?made an oil and gas discovery at the wildcat #D1-NC7A in?Libya’s Ghadames Basin. According to IHS Inc., the well is approximately 500 kilometers south of Tripoli and 170 kilometers west of oil production in Hamada Field. The #D1-NC7A discovery encountered multiple shows from three levels of reservoir formations with 64.4-degree API oil. At 8,276-8,300 ft. in Upper Acacus sandstone, flows of 668 bbl. of oil and 22.5 million cu. ft. of gas per day were reported. At a vertical depth of 8,936-24 ft. in the Middle Acacus sandstone, tests showed oil at 500 bbl. and gas at 21.1 million cu. ft. per day. In the Lower Acacus sandstone from 9,030-9,464 ft., multiple tests showed between 790 bbl. and 1,251 bbl. of oil per day, with gas flow between 27.6 million and 28.9 million cu. ft.

4 Libya
Calgary-based Verenex Energy confirmed a discovery at #G1-47/02 in Area 47 in the Ghadames Basin, Libya. The well is the company’s seventh in Block 2 of Area 47, and is the ninth announced discovery in Area 47 since drilling began in 2006. The #G1-47/02 wildcat is approximately 6.5 kilometers northeast of the #D1-47/02 Block 2 discovery. The well was drilled and cased to 10,645 ft. in the Memouniat formation. Extended-flow tests were performed from 12-ft. perforations in a sandstone interval in the Lower Acacus Formation. Although restricted by test equipment capability, approximately 4,167 gross bbl. of 41-degree light, sweet crude oil and 2 million cu. ft. of gas per day flowed through a 64/64-in. choke.

5 Turkey
ExxonMobil and TPAO, the state oil company of Turkey, have signed an oil exploration deal, subject to government approval, for the Black Sea. TPAO plans to start production in 2015-2016 if drilling starts by 2010. Officials estimate Black Sea potential reserves at 10 billion bbl. ExxonMobil will be the operator during the initial exploration phase and earn a 50% interest in the Samsun Block, which comprises approximately two million acres, and the eastern portion of 3921 Block. Seismic acquisition and evaluation programs for the two blocks are currently being operated by TPAO and are scheduled for completion in 2009.

6 Syria
In Syria, Gulfsands Petro­leum of London is reporting a discovery at wildcat #1 Yousefieh 1 in Block 26, northeast Syria. The well was drilled to a total depth of 2,139 meters and encountered an oil column of approximately 64 meters in the Cretaceous objective at 1,940 meters. The 63 meters of net oil pay has an average porosity of 18.6%. A flow test on the top 19-meter interval yielded 900 bbl. of 23-degree API oil through a 48/64-in. choke with no water. The #1 Yousefieh 1 is located approximately three kilometers from the early production facilities in Khurbet East Field.

7 Oman
Perth-based Oilex Ltd. found substantial oil in two zones in the #Al Jumd-1 on Block 56 in Oman. The company reported oil over a 197-ft. gross interval between 3,816-4,045 ft. in the Al Khlata formation. A second zone in the same formation at 4,200-4,357 ft. appeared to be potential pay with lighter oil. The well is drilling ahead to total depth of 4,922 ft. to test targets in the basal Haima and Huqf formations.

8 Uganda
In Block 1 of Uganda’s Kingfisher Field, London-based companies Heritage Oil and Tullow Oil Plc announced results from the #1 Buffalo wildcat. Drilled approximately 500 meters from the crest of the structure to a depth of 637 meters, Heritage encountered a gross hydrocarbon-bearing interval of approximately 123 meters with net hydrocarbon pay of approximately 43 meters. Testing indicates 28 meters of net oil pay in the principal oil-bearing reservoir section, overlain by 15 meters of net gas pay. Downhole pressure testing and sampling has confirmed the presence of moveable oil, and logs indicate excellent reservoir quality in all pay zones. Heritage believes that there is potential for the gross oil column to be significantly larger than reported because no oil-water contact was encountered. Block 1 is operated by Heritage Oil; it and Tullow each hold 50% interests.

9 China
PetroChina is reporting that recent drilling and testing indicates that 3.5 trillion cu. ft. of gas exists in a major field in Xinjiang Uygur Autonomous Region. Klameli Field, located in the Junggar Basin in northern Xinjiang, is PetroChina’s largest gas find in the area. The state company expects Klameli to produce 35 billion cu. ft. of gas a year for possibly 50 years. A national oil and gas resource official said that the basin has possible gas reserves of 88 trillion cu. ft. PetroChina plans to produce 120 billion cu. ft. in the Junggar Basin this year, and hopes to raise annual production to 175 billion by 2010.

10 China
A significant light-oil and gas discovery on Jinzhou 25-1 Field in Bohai Bay, offshore northeast China, is being reported by state-owned China National Offshore Oil Corp. Ltd. (CNOOC Ltd.). State officials indicate that the reservoir may have more than 700 million bbl. of oil. CNOOC Ltd. said it plans to double production from its Bohai Bay assets in the next six years to offset slow growth in onshore reserves.