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.

There is growing interest in the exploration of oil in Malawi

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?
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Alex
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Alex

Guy do we understand the long term consequences of drilling for oil in our precious lake? Do you want to destroy our beautiful heritage that make our country stand out, our lake of stars, lake Malawi. 3rd largest fresh water lake, for oil? What will we tell or answer our children or future generation? Will we tell them we failed to find sustainable ways of growing our economy, that’s we decided to drill for oil. Oil not as much as Angola or Nigeria, meaning we don’t have enough OIL to be global producer of oil. Why the hell would u… Read more »

Jacob Manda
Guest
Jacob Manda

I have studied Oil and gas extraction, Kawawa should be informed that if he has not done any research , blindly being negative is being a bit naive , please it’s important to study a little bit and than make comments , be it positive or negative. Please note that there is latest technology where the oil can be extracted onshore instead of digging in the water. The agreement clearly mentions to protect our lake. The authorities are not stupid , we have consultants and the president also made an announcement that we ll go ahead with the oil extraction.… Read more »

Q the B
Guest
Q the B

Koma Amalawi ena amangolubwalubwa!!! The article clarifies the false information which has been circulating. Nyasatimes, your investigate desks seems to be working genuinely…

Tumpale BandA
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Tumpale BandA

We are waiting for part 3. Malawians let’s join hands in the development of our country. Lets join hands

Dan
Guest
Dan

Inu a Nyasa mukigwira Ntchito yabho. Ife tufuna mafuta basi, dziko litukuke ili ,

Makhuludzo
Guest
Makhuludzo

Thanks Nyasa Times for keeping us updated with the Petroleum issues in Malawi. We are getting to understanding of the core matter in Petroleum.

Chipole
Guest
Chipole

Ifetu tikutsatira bwino lomwe nkhani ya mafuta pa Malawi pano. Tikuyembekezera zabwino zomwe zili mkudzazo. Achinyamata mwina nkudzapezako ntchito.

James
Guest
James

I like the MoU part also. I believe the Oil and Gas companies will surely continue to help tertiary education in Malawi as part of Social Corporate Responsibility once in operation. It is commendable.

Alex
Guest
Alex

You wishing for a fairytale. Read up on oil companies and how well they comply with environmental effects and impact of there actions. Then come we talk

Ndlovu
Guest
Ndlovu

From a look of the things it seems Malawi is trying to make a best deal in Petroleum industry. Big up for that, Government. Malawi will surely benefit from this if you are going to make the best deal in the industry.

Chikutumbwe
Guest
Chikutumbwe

Iam glad to hear and see that RAKGas is indeed a serious company really doing something on the ground. This is some positive development and hopefully some sections of my fellow Malawian will stop the ussual negative stories against the oil and gas sector. …lets wait and see whether we have the oil and gas as a country. .

Alex
Guest
Alex

Are willing to destroy our precious lake oil? Lets think long term and sustainable solutions for our countries economic growth!!!!

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