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Whoever wins the second round of the closely fought presidential election on 21 December, Tunisia will become the only country to have emerged from the 2011 Arab Spring uprisings with a fully functioning democracy. The country will set a further global precedent in 2015 if, as is likely, its new government decides to authorise exploitation of shale oil and gas reserves.For some months, Royal Dutch Shell has been poised to sign a development contract with senior officials from Entreprise Tunisienne d’Activités Pétrolières (Etap), but various political approvals are needed before this can happen.

Switzerland’s ABB Group announced on 30 September that it had signed a turnkey contract to build the Nawara gas treatment plant at the Ghannouch industrial district near Gabès, as part of the €500m ($634m) South Tunisian Gas Project (STGP). The project was awarded by OMV Tunisie Production GmbH, a subsidiary of Austria’s OMV (AE 279/17). Nawara will be developed in consortium with Canadian company Thermo Design Engineering Ltd in a deal worth $291m in total. Nawara will separate commercial natural gas from heavier hydrocarbons which will be processed to produce propane, butane and liquefied petroleum gas (LPG) to be stored in tanks.

Circle Oil has announced a light oil discovery with the El Mediouni-1 (EMD-1) exploration well on the Mahdia permit. EMD-1 was drilled in the north-central area of the permit in a water depth of 240 metres, 120km east of Sousse. The well was spudded on 8 June and drilled to a depth of 1,200 metres MD in the Upper Ketatna carbonates. The company said “very good light oil shows” were encountered in the main Lower Birsa carbonate target and the secondary Upper Ketatna carbonates target over a combined interval of 133 metres. Circle estimates recoverable resources at 100m barrels, but hole conditions deteriorated rapidly and Circle was unable to log the well.

The government has given the go-ahead for OMV’s €500m ($680m) investment in the Nawara gas development project, which will bring gas up from fields in the south of Tunisia by pipeline to a treatment facility at Gabés in the north. The project is a central element of the government’s attempts to establish domestic gas production which will go some way to reducing dependence on expensive Algerian imports. The advance of the project is an important milestone both for Entreprise Tunisienne d’Activités Pétrolières (Etap) and OMV.

The focus of upstream activity in the Mediterranean has shifted from the established hydrocarbons-rich zones of North Africa to the coast of the Levant and now increasingly to parts of the Adriatic, impelled both by violence and instability in Libya and also the opening up of opportunities in these new areas. Driven by the pressures of economic austerity in the aftermath of the Euro crisis, Greece and Italy have turned back to oil and gas licensing. Greece recently launched an ‘open door’ licensing programme, and Italy has also licensed new areas after many years during which progress was effectively frozen.

Australia’s Cooper Energy is looking to sell its Tunisian portfolio and opened a data room in March. Cooper said a number of interested parties were reviewing the opportunity and the data room was expected to remain open during most of Q2. “In the absence of a compelling offer, Cooper Energy considers that the greatest value will be realised through a sale after the drilling and production testing of the planned Hammamet West-3 ST-2” sidetrack well, expected in early 2015 provided a rig can be secured, Cooper said.

Norway’s DNO International has completed farm-ins to the Sfax Offshore exploration permit and the Ras El Besh concession under an agreement with Eurogas International and Atlas Petroleum Exploration Worldwide. DNO Tunisia now holds an 87.5% participating (100% paying) interest in the permit and the concession, and has assumed operatorship and a significant share of costs. The two licences are located in the prolific Gulf of Gabes and cover 3,296km2, mostly offshore in shallow waters. To date, three discoveries have been made with combined recoverable resources of 35m-60m barrels of oil, and the assets hold significant exploration potential, with 29 prospects estimated to contain 500m-700m barrels of unrisked resources.

Eve Howell’s Tangiers Petroleum has agreed a takeover of Jacka Resources, giving it new assets in Tunisia, Nigeria, Tanzania, Somaliland and Australia. Tangiers is offering 0.468 Tangiers shares for every Jacka share held, in an off-market deal valuing Jacka at $37m. The combined company will have interests in two high impact wells planned for 2014: the TAO- 1 exploration well in the Tarfaya block in Morocco, operated by Galp Energia, and the Hammamet West-3 sidetrack on the Bargou permit in Tunisia.

The Tunisian people have hard choices before them as they consider whether future governments should allow hydraulic fracturing (fracking) to take place in the southern desert and, if not, how the country should supply its long-term energy needs. Among officials in the Ministry of Industry’s energy directorate and Entreprise Tunisienne d’Activités Pétrolières (Etap) there is a barely suppressed sense of urgency as they weigh the unrealised potential of shale resources against the cost of importing ever larger quantities of energy from Algeria or elsewhere. However, the Tunisian populace is no more ready to embrace fracking than, for instance, the people of France, where President François Hollande has banned the technology.

While the Tunisian state cannot throw its backing behind shale exploitation until a new constitution is in place and a new government is elected with a full mandate, a project to establish the necessary infrastructure will soon get under way. Austria’s OMV is expected to make a final investment decision by year-end for the Nawara gas project, which involves the development of conventional gas fields in the southernmost part of Tunisia and the construction of a pipeline connecting the fields to a new processing facility at Gabès. 
OMV has taken over what used to be known as the South Tunisian Gas Project, which was merged with its Nawara development in February after Italy’s Eni withdrew backing.

Swiss oil trader Gunvor Group has increased its stake in Sweden’s PA Resources to 49.96% from 9.9%, following a rights issue in Q3 which raised SEK891m ($140m). Lorito Holdings, owned by the Lundin family, now has 9.9%. PA Resources, which has acreage in Republic of Congo, Equatorial Guinea and Tunisia, as well as the North Sea, said this year it had run into financial difficulties. As part of a board and management shake-up, former Addax Petroleum new ventures manager Philippe Probst stepped in as interim chief executive in May, then Acorn Oil & Gas and Fairfield Energy founder Mark McAllister was appointed in September to replace him (AE 256/13).

The roster of North African refinery projects under consideration has undergone a few changes over the past year as policy-makers have been forced to reconsider plans. Most notably, Société Tunisienne de Raffinage (Stir) has gone back to the drawing board with its project to build a new plant at La Skhira. The Tunisians had appeared to have secured up to $2bn of financing from Qatar Petroleum International to construct a 120,000 b/d refinery using Libyan feedstock (AE 232/4). But Qatar appears to have quietly dropped its commitment to finance the project, and the authorities are assessing four rival schemes, including the construction of a new and probably smaller refinery at Bizerte.

Circle Oil has expanded its acreage in Tunisia, raising its stake in the offshore Mahdia licence and farming into the Beni Khaled permit. Circle has agreed to acquire a 30% stake in Mahdia for $3m, increasing its holding to 100%. Broker Investec said the acquisition underlined Circle’s confidence in the El Medouini prospect, where a well is planned for H1 2014.

The European Investment Bank (EIB) has earmarked €3.65bn ($4.77bn) in loans to be disbursed to Africa, Caribbean and Pacific (ACP) states between 2014 and 2020, with sub-Saharan Africa a major beneficiary. Speaking to African Energy during the annual visit of ambassadors of ACP partner countries to the Bank’s Luxembourg headquarters, EIB vice-president for sub-Saharan Africa Pim van Ballekom praised recent African growth, saying: “Investing in Africa is good for Africa, of course, but also for European industries.” The €3.65bn includes €1.13bn from the European Commission, under the EIB-managed ACP-EU Investment Facility, for technical assistance programmes or interest rate subsidies. The other €2.5bn will come from the EIB’s own resources.

The Tunisian government has embarked on a second attempt to persuade the nation of the potential benefits of shale gas exploration after its first attempt encountered popular opposition. On 27 June, minister of industry Mehdi Jomaâ launched a “national debate on energy” at which both caretaker President Moncef Marzouki and Prime Minister Ali Larayedh made speeches. Officials canvassed by African Energy before the launch said that the technical decision to develop shale resources had already been taken in the ministry and at state oil company Entreprise Tunisienne d’Activités Pétrolières (Etap). The task is now to muster the necessary political and popular backing.