Kudzanai Sharara
Invictus Energy says it will this year focus on concluding a farm-out process that is expected to bring in a strategic partner for the exploration programme at its Muzarabani oil and gas project.
The Australian Securities Exchange-listed junior miner has been making steady but impressive progress on the Muzarabani project since its announcement in October 2018.
Some of the major milestones achieved in 2019 include signing of an offtake Memorandum of Understanding (MoU) with Sable Chemicals and another non-binding memorandum of understanding with Tatanga Energy (Private) Limited for the development of a 500MW gas-fuelled power station in two stages of 150MW and 350MW, with an eventual supply of up to 36,5 billion cubic feet of gas per year for the next 20 years.
The next step now is to bring in a strategic partner through a farm-out process.
“We are also planning to conclude a farm-out process and bring a strategic partner for the forward exploration programme,” said Invictus managing director Scott Macmillan in an interview with Stockhead.
As a result, Invictus’ continued geological and geophysical studies and the findings it has been recording, significant industry interest has emerged in recent months ahead of the planned marketing programme to attract a farm-out partner.
According to Nextoilrush.com, big oil players such as Tullow, Total, ExxonMobil and Sasol might be interested in pinching a slice of the pie when farm out for the Muzarabani project begins.
In the oil and gas industry, a farm-out agreement is an agreement entered into by the owner of one or more mineral leases, called the “farmor” and another company who wishes to obtain a percentage of ownership of that lease or leases in exchange for providing services such as the drilling of one or more oil and/or gas wells.
Macmillan added that focus will also be to provide “our shareholders to the exposure of drilling one of the world’s largest conventional oil and gas prospect”.
He added that this (drilling) will be a “closely watched event”.
Another focus area for Invictus, according to Macmillan will be to conclude its production sharing agreement with the Government of Zimbabwe.
In November 2018, President Mnangagwa announced that Invictus had committed itself to enter into a production-sharing agreement with the Government, which would be applicable when the project proceeded to commercial production stage.
Macmillan said the production-sharing agreement will ensure that a predictable, stable and transparent legal and fiscal regime is put in place that is commensurate with international best industry practice.
Market watchers are of the opinion that if the project is to come to fruition, it will find a ready market as Zimbabwe and other southern African countries are facing critical energy deficit.
At least 10 000MW of coal fired power are reportedly being retired from the grid which provides Invictus the opportunity to fulfil significant existing demand in the region.