Sierra Leone has entered into a significant $225 million offshore oil exploration and production agreement with Nigeria-based Marginal Energy Limited. This move is part of the country's concerted efforts to revitalize its upstream petroleum sector.
The agreement was formally signed on Thursday during the Invest in African Energy conference held in Paris. Sierra Leone has been actively promoting its offshore licensing opportunities to attract international investors.
Marginal Energy Limited is a Nigerian independent oil and gas company specializing in upstream exploration and production, with a particular focus on marginal fields. It represents a growing cohort of indigenous firms expanding their operations beyond Nigeria.
Speaking on the deal, Sierra Leone’s President, Julius Maada Bio, emphasized the agreement's role in unlocking the nation's petroleum potential while ensuring benefits for its citizens.
The licence, executed through the Petroleum Directorate of Sierra Leone, encompasses offshore blocks G-145, G-146, G-147, G-160, and G-161. These blocks collectively cover an area of about 6,800 square kilometres.
These blocks are situated within Sierra Leone’s largely underexplored offshore basin. The government is currently repositioning this region as a frontier destination for oil and gas investments.
Under the terms of the agreement, Marginal Energy has committed to an extensive seismic survey and drilling programme. Exploration spending is expected to surpass $225 million, a substantial investment aimed at generating new geological data and identifying commercially viable reserves.
The fiscal structure of the deal also ensures state participation. Sierra Leone will retain a 10% carried interest in oil projects and 5% in gas during the exploration and development phases, meaning the government will not bear upfront costs.
Furthermore, the country holds the option to acquire up to an additional 9% participating interest on a paid basis once production commences. This allows Sierra Leone to increase its stake should discoveries prove commercially successful.
Sierra Leone has long aspired to become an oil-producing nation, but progress has been gradual despite earlier exploration campaigns in the 1980s that identified offshore hydrocarbon potential. In recent years, the government has intensified efforts to attract investment by updating regulatory frameworks and commissioning new seismic data to enhance the understanding of its reserves.
