The Seychelles Petroleum Licensing Initiative

Contents of the Presentation Seychelles - Geographic Extent Geological Background Legal Framework and Fiscal Regime Current Licensees Licensing Initiatives Conclusion

Hong Kong Look at top row picture on the Beta. Seychelles 3

SEYCHELLES PLATEAU SAYA DE MAHLA MAURITIUS 4 Look at top row picture on the Beta. MAURITIUS 4

EEZ ~ 1.33 million Sq.Km Land Area = 455 sq.Km Amirante Platte Coetivy GRANITIC ISLANDS Amirante Platte Coetivy Aldabra group Farquhar group EEZ ~ 1.33 million Sq.Km Land Area = 455 sq.Km

THE PETROLEUM SECTOR Currently there is no production and no refinery in Seychelles. PetroSeychelles is the arm of the Government that oversees the Upstream Petroleum Sector. Seychelles Petroleum Company (SEYPEC), is also government owned and its operations are in the downstream sector.

Geological background

Unique by a thousand miles 750,000,000 years old

Seychelles at the heart of Gondwana in the Early Permian (300 Ma) Tectonic Evolution Seychelles at the heart of Gondwana in the Early Permian (300 Ma)

Tectonic Evolution Early Late Cretaceous (~80 Ma). The complexity of the tectonic evolution of the Mascarene Plateau is due to the imposition of three phases of rift/drift tectonics that eventually cleaved the microcontinent from the centre of Gondwana. Paleocene (~60 Ma). During the separation of India from Mascarene Plateau. Early Late Cretaceous (~80 Ma). Seychelles/India split from Madagascar Early Cretaceous (~150 Ma) After separation of East and West Gondwana

Exploration Provinces

Stratigraphy C LEGEND Intra Eocene/Palaeocene marine shales This stratigraphic column is a compilation from all four wells and available seismic data. It also pulls in regional elements from the Bombay High and Madagascar area, both of which were juxtaposed against Seychelles prior to plate tectonic break up. Age of the Jurassic salt is speculative, but is reasonable when compared against East Africa and Madagascar analogues. Distribution of Jurassic salt is also unknown Age of oldest sediments in the Karoo basin is unknown. In Northern Madagascar the oldest known Karoo is Permian. The oldest Permian in northernmost Madagascar is marine, and therefore it is highly likely that any Permian in Seychelles is also marine and therefore a good oil prone source rock Base Palaeocene marine shales Maastrichtian/Palaeocene marine shale and volcaniclastics Upper Cretaceous marine shales Lower Cretaceous-Uppermost Jurassic marine shales Mid-Late Jurassic Salt Lower Jurassic-Triassic Karoo continental shale Geology

Source intervals encountered Source Rocks In the Amoco wells, several source horizons were encountered within the Upper Triassic to mid Jurassic section LEGEND Source intervals encountered in the wells

Seismic Data coverage Map 20,000 Km of M2D Data Acquired by Fugro 29,000 line km of seismic, gravity & magnetic

Improved Imaging Geophysical Database

Mapped Leads

Legal Framework and Fiscal Regime Petroleum Mining Act The Act vests the ownership of petroleum accumulations within Seychelles in the State. The Act permits the Government to grant a non-exclusive licence to companies to carry out petroleum exploration operations The Act also permits Government to enter into a Petroleum Agreement with an oil company under which the company is granted exclusive rights to explore for and produce petroleum within Seychelles. The size and location of acreage to be included in a Petroleum Agreement is settled by negotiations. Size must not Exceed 10,000 Sq Km

Legal Framework and Fiscal Regime The Model Petroleum Agreement   Government’s thinking regarding the nature of the contractual framework which it wishes to be considered at the time of negotiation, is reflected in the Model Petroleum Agreement. A Petroleum Agreement has a duration of 34 years if a commercial discovery takes place.

Legal Framework and Fiscal Regime Contractual period   The contractual period is divided into two phases: An Exploration Phase of 9 years which is made up of three Periods of 3 years + 3years + 3 years.  A Development and Production Phase which commences on the date on which commercial viability of the field is decided on by the company and continues for 25.

Legal Framework and Fiscal Regime The economic and fiscal package comprises three principal revenue sharing mechanisms and these are summarized below:   A royalty of 10% is levied on the market value of oil produced and saved during each month. Petroleum Income Tax of 35% and is paid in accordance to the Petroleum Income Tax Act of 2008.

Legal Framework and Fiscal Regime Petroleum Additional Profits Tax (PAPT) PAPT is a resource rent tax levied on cash flows. Currently the Model Petroleum Agreement provides for a two-tier structure for PAPT. The first tier of PAPT will become due once the Company has earned a particular threshold rate of return on its investment. The second tier of PAPT will be due after the company has earned an even higher post-tax rate of return.  

Legal Framework and Fiscal Regime Petroleum Additional Profits Tax (PAPT) The first threshold rate of return which triggers payment of the PAPT is 15% and the tax rate is 25% The second threshold rate of return and tax rate are negotiable .  

Current Licensees

Currently Held Acreage WHL Afren

The Licensing Initiative

The Licensing Initiative License Round or Open File process ? What type of award process for a Petroleum Agreement ? License Round or Open File process ? Open File award process Applications for a 10,000sq km area may be made at anytime. PetroSeychelles verifies if minimum application criteria are met Notice of application filing & solicitation of competitive applications No need to reveal identity of applicants or proposed terms Prescribed period for competitive application filing (90 days) 28

The Licensing Initiative What should be the variables in the Petroleum Agreement ? Area Relinquishment Terms Work Program Fiscal Terms Rental Payments Training Commitment   Duration of Exploration Phase and Periods ? Period 1 (Years 1-3) work program must include at least funding for seismic ($15M) Period 2 (Years 4-6) work program must include funding for at least one well ($25-$60M) Period 3 (Years 7-9) work program must include funding for at least one well

The Licensing Initiative What are the recommended minimum acceptable Applicant qualifications ? Technical & professional capacity Financial ability

The Licensing Initiative Study Area WHL Energy Afren/Avana Exclusion Area

SUMMARY LEGAL AND FISCAL TERMS EXPLORATION PHASE RELINQUISHMENT TERMS PRODUCTION PHASE RENTAL PER SQ KM ROYALTY PETROLEUM INCOME TAX STATE PARTICIPATION PETROLEUM ADDITIONAL PROFITS TAX 9 YEARS, 3 x 3 x 3 40% 30% Balance 25 YEARS US$10 US$15 US$20 10% Except for Marginal Fields 35% NO TIER 1 Tax of 25% at ROR of 15% TIER 2 Negotiable 32

Shelf submitted to CLCS Extended Continental Shelf submitted to CLCS Northern Area Submission Area : 22,143 sq km East Africa Seychelles Plateau Joint Submission with Mauritius Area : 387,000 sq km Saya de Malha Bank Madagascar

CONCLUSIONS Seychelles is a frontier area and the data acquired so far confirm that a working petroleum system exists with all necessary ingredients (source, reservoir, seals, structures) to make the area an oil Province. Large volume of data are available and interesting leads have been mapped The government has recognized the importance the discovery of petroleum would have on the economic objectives and has put in place the required legal framework to facilitate exploration and eventual production within its maritime boundaries.

CONCLUSIONS There are opportunities for companies to farm into existing licenses or submit a proposal or bid in the forthcoming licensing initiative. Seychelles is politically stable and the working physical environment is pleasant year round.

Visit us at : www.petroseychelles.com Thank you Visit us at : www.petroseychelles.com