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In the week that the citizens of Madagascar go to the polls in the first round of their presidential election, a new licensing round, covering 44 offshore blocks in the Morondava basin, will be launched by Omnis, the government agency responsible for the extractives sector.
The country is eager to bring explorers to its western offshore sedimentary basins. These have been under-explored, despite being located across the maritime boundary with Mozambique, which has played host to huge gas discoveries in recent years.
The launch will take place at the annual Africa Oil Week conference in Cape Town in the week of 5 November. The promotional benefits provided by this event have overridden any issues that may arise from the clash with election day on 7 November.
Omnis is working with geophysical data firms BGS (part of China’s CNPC) and Norway’s TGS on the licensing round. It says recent studies “have resulted in new data that suggest there is a significant potential for future discoveries, both on- and offshore”.
“Our goal is to intensify maritime exploration activity,” Voahangy Nirina Radarson, Omnis’ general manger said in a pre-launch statement. “We are confident that this will mark the renewal of investment in the upstream oil sector in Madagascar.”
Madagascar is keen to broaden the base of an extractives sector that is, at present, heavily dependent on mining—notably nickel and cobalt, ilmenite, chromium, gemstones and, now, gold—and to reduce its almost total reliance on imported oil and gas. And while the presidential contest is marked by intense personal rivalry between leading contenders, they share a broad consensus over economic policy and the need to attract more international investors.
Omnis—Office des Mines Nationales et des Industries stratégiques—is respected for its technical competence and has a track record of resisting political interference. It has maintained standards of professional good governance, even through periods of instability.
“Our goal is to intensify maritime exploration activity”—Radarson, Omnis
In July, the Extractives Industry Transparency Initiative (EITI) announced that the island had made “significant progress” towards becoming compliant during 2019. “We have met 80% of the EITI good governance requirements, but there is still a lot to do,” Daniela Andriafeno, executive secretary of EITI Madagascar said at the time, according to a government website.
There has been some recent exploration activity. In November last year, the government approved a production-sharing exploration contract with BP for four blocks that had been surrendered by ExxonMobil—Boeny, Mahajunga North and South and Cap Saint-André. As of January 2018, some 15 companies, including China’s Yanchang Petroleum and Sweden’s Crown Energy, were working with Omnis, with three contracts covering offshore areas and 12 onshore areas. But this activity covers only a small segment of a total of 200 blocks that the authorities have drawn up.
Madagascar does have considerable heavy oil deposits, developed by Madagascar Oil, which has plans for an export terminal and is already contracted to supply Jirama, the national power utility. But the government’s major hopes lie with the search for commercially viable offshore deposits of lighter oil and gas.
There are three main candidates in the presidential elections: Marc Ravalomanana, a former head of state deposed in a 2009 putsch; Andry Rajoelina, who led the transitional regime installed after him; and Hery Rajaonarimampianina, who was elected president in the 2013 polls that restored democracy.
The race could well go to a run-off ballot in December and the outcome is highly uncertain. But whoever is elected is likely to adopt a positive attitude towards investment in the hydrocarbons sector, giving Omnis the confidence to push on with the bidding round.
The election campaign has seen some nationalist politicians ramp up the rhetoric of Madagascar’s claim to the small Iles Eparses, between the island and mainland Africa, in the hope that this would open up Malagasy economic rights to new marine exploration territory.
Paris has indicated a readiness to offer Madagascar some form of co-management, as it has already negotiated with Mauritius for the island of Tromelin. There could be scope for an accord that maintains the rigorous protection of the environment that now shields the islands’ rare ecology, while opening up scope for exploration of new offshore territory to Madagascar’s benefit.