eBusiness Weekly
Golden Sibanda
Invictus Energy, the Australia Stock Exchange (ASX) listed firm exploring for oil and gas in Muzarabani, says it has edged closer to concluding a production sharing agreement (PSA) with Government.
The arrangement would boost the fiscus if the company successfully discovers the two globally sought after energy sources amid encouraging study results on previously gathered data.
Invictus is working together with the Government to put in place adequate oil and gas legal provisions, which were not in place, especially regarding issues such as production sharing because Zimbabwe is a frontier destination when it comes to extraction of petroleum or exploitation of conventional gas in the country.
It is strongly believed successful discovery of oil and gas or both in Zimbabwe, will have enormous positive impact on the Southern African country’s economy.
In Mozambique for instance, where the largest gas deposits in Africa were discovered, it is expected gas will increase the size of the local economy, once one of the world’s least developed and poorest, by almost 30 percent.
This comes as Invictus has recorded encouraging results from reprocessing data first gathered by global oil giant, Mobil, in the mid 1990s.
The positive results have been confirmed by independent tests.
The Australian firm is re-evaluating Mobil’s original data set using modern techniques, which thus far have proved potential for both oil and gas deposits in Muzarabani.
The company says while its prospective basin has shown more conventional gas than oil, the company and the country would still derive significant benefits, given the huge global demand now.
Part of the reason the petroleum giant, Mobil, abandoned exploration in Muzarabani in the mid 1990s was perception that the area was more prone to gas, which had no market back then.
Invictus Energy managing director Scott MacMillan, told Business Weekly in an interview recently that the company would now move to conduct further exploration using geophysical methods.
The geophysical exercise, either gravity magnetics or seismic tests to get images of the subsurface, will enable the company to identify areas with potential for oil or gas and high-grade sites
“At the moment we are conducting our environment impact assessment and that will pave the way for us to acquire some seismic data and then do some drilling,” MacMillan said.
The geophysical data will then be in-filled into three kilometre grid spacing’s from 20km spacing, allowing the company to do high-grade drilling locations to increase chances of successful discovery.
MacMillan said the geological chance of discovering either oil and gas or one of them in a highly uncertain basin which has never been drilled before, averages from 1 in 5 and 1 in 10. He also said, in the event of a successful discovery of commercially viable gas or oil, it would take between three and five years before the country starts extraction.
The Invictus MD said discussions were already underway with a number of large, small and medium size companies to undertake exploratory drilling at the Muzarabani oil and gas project.
Apparently, many players in the oil and gas industry were surprised that an asset such as the Muzarabani project had been sitting idle for such a long time without being exploited.
But now, while original data evaluation and remaining on-ground image data gathering progress, Invictus is already putting other structural arrangements in place, especially the PSA.
MacMillan said negotiations on PSA were just about complete and the agreement will specify what each part is obligated and entitled to as well as stipulate these through an Act of Parliament.
“We have made very good progress, but there are two parts to it.
First, there is the Petroleum Bill, being amended. When Mobil were exploring here, there was a provision to enter into petroleum agreements, without specifying what those agreements are.
“There is an amendment to specify production sharing agreements, pipeline agreements and others,” he said.
“What a production sharing entails is basically to provide the host Government with a fair economic rent for her resources and also to provide investors with a fair return.
“In oil and gas, the host Government takes taxes, royalties and other benefits. So with the PSA, the Government can receive a portion of profits or product at their choice,” MacMillan told this publication.
