Aussie firm hails Govt policies
Invictus Energy, the Australian firm searching for oil and gas in the Muzarabani and Mbire districts of Mashonaland Central Province, has commended the Government for its investor friendly policies, which gave it the confidence and comfort to invest millions of US dollars in Zimbabwe.
Notably, it had been 30 years since serious exploration last happened in Zimbabwe owing largely, Invictus Energy said, to “above the ground issues, as opposed to geological potential.
Senior Government officials who attended a site tour of the Muzarabani-Mbire oil and gas project, led by Invictus board, this week pledged full Government support to ensure success of the initiative.
The company has so far invested about US$12 million into its exploration project in Muzarabani and Mbire and expects to sink a further US$25 million towards oil and gas well exploration drilling soon.
Preparations are already at an advanced level for a two well drilling programme scheduled for end of June or early May this year to determine whether the firm’s prospective area hosts hydrocarbons (petroleum).
Already, early results from further processing of geological data gathered by French oil giant Mobil in the early 1990’s has shown encouraging results about the area’s potential for oil and gas.
On its part, Invictus carried further studies when it conducted another seismic study (gathering sub-surface vibrations) entailing much denser line spacing to identify locations with the highest potential for petroleum.
Findings from the secondary and primary data suggesting strong potential for oil and gas in Mashonaland Central provinces have been independently verified by international geologists and geophysicists. The study findings suggest that the area may be host to 9,25 trillion cubic feet of gas and nearly 300 million barrels of condensate, essentially a light oil.
The ongoing exploration programme marks only the first time serious exploration for hydrocarbons has been undertaken in Zimbabwe since Mobil’s excursion in the 80s and 90s, which saw more potential for gas than oil.
Commercial discovery of oil and gas in Zimbabwe has been touted as a potential game changer in many respects. The country faces acute shortage of power and the project would make Zimbabwe energy sufficient.
The Government would, expectedly, receive about 50 percent of the oil or gas produced if discovered, millions of US dollars in royalties and taxes while hundreds of people would get jobs directly or indirectly across the petroleum value chain and other industries.
Invictus chairman, Dr Sturt Lake, who led the site tour of the Muzarabani-Mbire special grant spoke glowingly about how the Second Republic’s policies had inspired confidence at the company to invest in Zimbabwe.
Dr Lake’s team also comprised the entire Invictus board of directors including deputy chairman Joe Mutizwa, chief executive Scott MacMillan and director Paul Chimbodza.
He said findings of studies carried thus far had demonstrated huge potential that the country may have significant hydrocarbons.
Dr Lake said the company had been meticulous in carrying out preparations for exploration well drilling to minimise the chances of drilling dry holes when it sinks the first two wells.
This was critical especially considering that Namibia, which recently recorded commercial discovery, achieved that after 30 dry holes while South Africa succeeded after drilling 200 dry holes.
“Zimbabwe has also developed a very supportive jurisdiction, supported by high quality infrastructure with multiple downstream opportunities,” Dr Lake said in Muzarabani.
Other incentives put in place by the incumbent Government, he said, included provisions for offshore banking, 100 percent remittances of capital/profits and special economic zone status, which allows for tax holidays and customs duty exemptions among other attractive attributes.
“We have found the Government, stakeholders and the local communities to be very supportive…and i would like to thank the importance played by the local traditional and local Government leadership in making our exploration work possible,” he added.
Dr Lake said the Government did well to amend the Indigenisation and Economic Empowerment Act in 2018, shortly after Invictus acquired its special grant, issued in 2017.
The empowerment law was cited in the past as one of the major impediments to foreign investment.
Invictus has also, as part of the Government’s generous incentives package, been accorded national project status, allowing for duty free importation of key equipment.
Invictus chief Scott MacMillan executive weighed in saying Zimbabwe saw virtually now exploration activity in the oil and gas area for over 30 years since Mobil left, due to policies of the previous administration.
“With the new Government being put in place, they have put a lot of investor friendly reforms, which allowed us and gave us the confidence to come and spend quite a lot of money.
“We have spent probably US$10 million to US$12 million already, including the seismic campaign and we will be spending another US$25 million on the drilling campaign.
“So, that is quite a commitment to make, it’s risk…but the reforms that have been put in place by the Government have allowed us and given our investors confidence that we can come to Zimbabwe, we can explore and if we make a discovery we are gonna have a long term relationship with the country,” he said.
An agreement has already been consummated with the Government, the petroleum exploration development and production agreement (PEDPA).
This governs the rights and obligations of each part during exploration up to production stage. The parties are also working on a production sharing agreement, which entails how the oil or gas will be shared.
“What we are also working is the petroleum sharing agreement with the Government. That defines the fiscal terms over the life of the project. That will divide what the investors get and what the state gets in the form of taxes, royalties, production and profit share and then equity in the project,” Mr MacMillan said.
He said the agreements were critical given that this could be a long term relationship and investment, which might have a lifespan of 40 to 45 years. Minister of State for Provincial Affairs and Devolution, Senator Monica Mavunga said Government was excited about the economic potential of the oil and gas projects, as well as its potential benefits to the country and local communities.
“It is without doubt that the major objective of this project is to enhance the gross domestic product of this province and that of the nation at large,” she said.
She said oil was the life blood of any economic progression, so expressed hope that this project will not only realise the aspirations of Zimbabwean citizens, but will help attainment of the Government’s vision 2030 for an empowered upper middle income country, as exposed by President Mnangagwa.
Both Energy and Power Development Minister Zhemu Soda and Home Affairs Minister Kazembe Kazembe, legislator and provincial chair of the province, respectively, pledged full support of Government to the project.-The Herald
