Sovereign Fund signs deal with Invictus

THE Zimbabwe Sovereign Wealth Fund (ZSWF) has agreed with Australian oil and gas exploration firm Invictus Energy on the prospecting and exploitation of any gas and oil finds in Muzarabani where the Government has ceded its mineral rights to the wealth fund.

The Government gazetted a portion of the Cahora Bassa Basin South, which covers the Muzarabani and Mbire districts in Mashonaland Central, a reserved area and ceded this to the ZSWF which is administered by the Treasury.

A sovereign wealth fund is a state-owned investment fund composed of money generated by the Government, often derived from a country’s surplus reserves, minerals or any other sustainable source and is set up to manage, preserve and create wealth to stabilise and grow the economy in times of crises and to create a pool of assets to benefit future generations.

These funds can hold equity through shares or can hold other long-term assets that generate income, such as a proven gas and oil field would do.

Geo Associates, the parent firm of Invictus Energy, is the registered holder of special grant 4 571 measuring 100 000 hectares located within Cahora Bassa Basin South, whose total area covers approximately 7 093 000 hectares. The Australian company also holds an existing application to expand its current exploration efforts beyond the partnership in the enlarged SG4 571, into about 3 875 000 hectares or almost 55 percent of the basin.

This would allow the company to expand its prospecting and exploitation should test wells starting mid this year find gas and oil, or allow it to select other areas with the right domed geology to seek a productive field.

Finance and Economic Development Minister Mthuli Ncube said at the signing ceremony yesterday, “In March 2021 Geo Associates and the Minister of Mines and Mining Development (Winston Chitando) executed a Petroleum Exploration Development and Production Agreement.

“The agreement defines Geo Associates’ work programme obligations, development timelines, cost recovery mechanisms, data sharing and reporting in respect of the development of the hydrocarbon potential of special grant 4 571.” As part of its obligations under the agreement, Geo Associates has completed a detailed seismic data acquisition campaign within SG 4 571.

A seismic survey basically uses ultrasound to map the geological areas beneath the surface to seek the structures that can trap gas and oil.

The survey gathered a lot of additional underground data to refine the drilling location for the Muzarabani-1 exploration well.

Geo Associates also proposed to increase the prospects of a commercial discovery of crude oil or natural gas through more seismic surveys into the area known as reserved area, part of the Cahora Bassa Basin South.

The miner also committed to securing an additional rig slot and associated equipment to drill a second test well in the exploration drilling campaign, which is estimated to start in June or July.
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Currently, the parties are negotiating an international best practice petroleum production sharing agreement, which will ensure the Government gets an equitable share of petroleum or royalties in the event of commercial discovery.

“The parties are exploring the possible collaboration to develop upstream natural gas opportunities in Zimbabwe and on the 28th September 2021 the ZSWF authorised Geo Associates to extend its data capture programme into the reserved area,” the minister said.

But beyond the partnership in the enlarged SG 4 571 area, the minister said there might be further collaboration in other areas of mutual interest that do not form part of the existing agreement and would be dealt with in separate legal instruments.

Accordingly, the parties have agreed to conclude the outstanding matters in the proposed agreement by the end of next month and then take these to Parliament for approval by July.

Minister Ncube said Zimbabwe was encouraging more investment into gas and oil exploration in the country as part of concerted efforts to grow the economy.

“I would like to therefore take the opportunity to re-assure our partners that as Government we fully support the aggressive investment into the oil and gas exploration, which they are carrying out and we are confident that this agreement today lays the foundation stone for a vibrant and productive oil and gas sector that will contribute to the creation of jobs, generation of exports and delivery of energy security for Zimbabwe,” Minister Ncube said.

Where the agreed timelines are not met, the parties shall agree on the mutual extension of such timelines.

He said the agreed matters came at the opportune time when Zimbabwe looks to achieve its vision of an empowered upper middle income country status by 2030.-The Herald