The Gambia government in a press release has emphasised that the widespread rumours on social media that oil drilling has begun in The Gambia are totally false.
The release, issued yesterday outlined the following as the facts regarding potential oil exploration in the country:
So far, there is no drilling of oil in The Gambia. What is happening is that three oil companies—FAR, Petronas and Erin are mobilising to do the drilling of the first ‘test well’ before end of the year to verify if The Gambia possesses oil reserves at commercial quantity or not.
The cost of the drilling is estimated at $50 million which is shared by the 3 companies according to their shares in licence interest. Though government is a party, it will not be contributing in this phase. The drilling will be led by FAR on behalf of the parties including government. Government and the parties involved do have monthly meetings on all activities based on a work plan under a Due Diligence Committee that supervises their operational activities.
Government has 15% shares once there is discovery/production and this could increase by another 5% at commercialisation. In addition, The Gambia Government will receive royalties for any barrel produced to be determined by market price of oil.
Technically, there is a difference between licence interests and shares. For now, though, FAR and others have licence interest and the government is carried by them. This is called “carried interest” to avoid government contributing its limited resource for the exploration phase and mitigate the risk of non-commercial discovery. This phase will be totally financed by the three companies of FAR, Petronas and Erin.
Therefore, The Gambia government hereby reassures citizens that the Barrow administration remains committed to the noble principles of transparency and accountability in all its activities especially, the harnessing of the country’s natural resources.