Opening the Cocoon: Unsettling the mists behind oil licences in Malawi- Part 2
As we keep on giving true and accurate information to the citizens of the Warm Heart of Africa and the entire world on Malawi’s Petroleum Sector, Nyasa Times, through its investigative desk conducted another fact finding exercise to find out on the Petroleum Licences’ Moratorium (Suspension) and their subsequent reinstatement.
As a background, Malawi granted it’s Oil and Gas Licences in 2011 and then in 2013, Nyasa Times has noted that government used open tender method of sourcing Multi National Cooperatives (MNCs). When the bids were prepared as per the block provision of Petroleum Act’s Regulations (1983), the Ministry advertised domestically and internationally.
Due to the fact that Malawi is a new entrant in the global oil sector with little geological information, government did not request for ‘signature bonuses’, which is a norm in many countries with adequate information on the sector. Apart from the licence holders, so many institutions applied for the blocks but it was too little too late to change the decision. For 2013 Application Round, some of the companies which submitted their bids include African Oil Corp and Horn Corp, Gluon Energy, Nu Energy, Pan African Oil Holdings Limited, Bahari Holding Limited and many others.
The government, as represented by members from different stakeholders such as Justice and Constitutional Affairs, Lands, Environment, Foreign Affairs, Finance, Labour, Industry and trade, and indeed many others, developed an evaluation criteria to match the emerging issues on the Oil and Gas international level.
Some of the issues included the commitment to protect the environment, the company program and expected expenditure, Cooperate Social Responsibility commitments, company’s commitment to support government’s capacity development, training and partnerships to be developed with local tertiary institutions targeting on Oil and Gas courses, experience of the company at international and regional levels and many others.
The results for the meeting which was held on 13th July, 2013, RakGas MB45, one of the firms searching for oil and gas in Malawi, emerged winners of blocks 4 and 5 since Blocks 1, 2 and 3 had already been issued licence during the 2011 Running Session.
After granting of the licence, RakGas commenced it’s activities of which by now, they have done a Full Tensor Gravity (FTG). FTG is considered an area specific Airborne Geophysical Survey in Blocks 4 and 5.
RakGas has also conducted Geological and Geophysical Surveys to determine availability of segmentation which are most leading parameters of formation of Oil and Gas long time ago. This activity was mainly done on the land (Onshore), implementation of CSR such as drilling of boreholes across the country as lead by Ministry of Water and Irrigation, donation of medicine and laboratory equipment to government.
RakGas has also been taking part in career development as evidenced by the steps undertaken to sign an MoU with University of Malawi and Malawi University of Science and Technology (MUST) as reflected in their reports and verified by Nyasa Times.
The verification exercise involved contacting government and the involved tertiary institutions who testified that the reports were reflecting the situation on the ground.
Suspension of licences
After noting that there were alleged irregularities in the process of issuing the licences, Malawians demanded for an explanation from government. As a result of this, government suspended all the licences in Malawi’s Oil and Gas Sector, paving way for investigation whose interest was to check if the licences were granted according to the Laws of Malawi (Petroleum (Exploration and Production) Act, 1983.
On 23rd February, 2016, government wrote RakGas to appear before it and explain why their licences should be cancelled after suspecting issues on ownership of the licences and violation on the non-contiguity provision provided by the law.
RakGas acknowledged receipt of the letter on 3rd May, 2016 and gave their explanation. The company further appeared before government on 16th May, 2016 and gave their position. On the part of the government, the leading institutions were the Ministry of Natural Resources, Energy and Mining as a chair and Ministry of Justice and Constitutional Affairs. The meeting was Chaired by the then Minister of MNREM, Bright Msaka, SC and Bonwell Mlenga of Ministry of Justice.
After the meeting, it was justified that the company got the licences 1. legitimately; 2. The owners of Blocks 4 and 5 are not the owners of Blocks 2 and 3 despite having similar programs; 3. There was no violation of non-contiguity provision by the Laws.
Following this, government announced the removal of the moratorium on Blocks 4 and 5 on 14th June, 2016. This was almost Seventeen (17) Months of suspension since the suspension was officially communicated to the RakGas on 18th November, 2014.
During and post moratorium activities
During the moratorium, RakGas, as required by the communication to them and all other companies, suspended all its operations, including implementation of CSR activities, conduction of Geological and Geophysical works and even payment of ground and training fees as requested by the 2009 Petroleum Act’s Regulations.
After moratorium, the company resumed it’s works and currently, they are planning to commence conduction of seismic studies on offshore zones in Block 4. Further to this, drilling work activities will commence it areas where through their Geological and Geophysical exercises, have been earmarked as potential zones of Oil and Gas discoveries.
Whilst the company had a Binding Production Sharing Agreement which was signed in May, 2014, government, through the Oil and Gas Section of the Ministry, initiated the renegotiation exercise of the PSAs so that a good deal with arrived at which favours both the Company, Government and Citizens (especially those to be found with Petroleum Development Zones (PDZ)).
What then happened after intention to Renegotiate the PSAs ~~ Look out for Part 3:
- Pre, During and Post Renegotiation Phase; Are Parties involved, heading towards the right direction?