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Left waiting at the altar in Madagascar

The country’s efforts to kickstart offshore exploration have hit a snag

The Madagascar licensing round was launched and ready to roll, but then one partner went missing. New president Andry Rajoelina, sworn into office in January, decided he wanted to have another look at a process drawn up under his predecessor and has suspended it until further notice.

A statement issued on behalf of Madagascar's state hydrocarbons firm Omnis on 15 February gave no indication of when, or if the process would resume. "Omnis in partnership with TGS and BGP, regret to inform you that following the decision from the newly elected government, the 2018/2019 Madagascar Licensing Round involving 44 blocks in the Morondava basin is suspended until further notification," it said.

The country's first licensing round since 2006 was launched at the Africa Oil Week conference in Cape Town in November, with 44 offshore blocks covering over 63,000km² of the Morondava Basin off the western coast on offer. A bid deadline of end-May was set.

But the timing of the launch was a calculated risk, coming a day before the first round of Madagascar's presidential election in early November. Omnis was clearly in a hurry to get the long-mooted round moving, in the hope that, once it was in motion, it would be less likely to be impeded by political concerns. Instead, the process has been brought a halt.

Even if it proves to be a temporary one, the suspension was badly timed for Omnis and its partners, led by data firm TGS. It came just a few days before a licensing round roadshow in Houston on 19 February, which was followed by another pre-planned roadshow in London in 26 February. Now without Omnis participation, these events had to be hurriedly rebranded as presentations on the country's oil and gas prospectivity, accompanied by data viewing, rather than an opportunity to discuss licensing terms.

What happens next?

Eugenio Toraldo Serra, TGS' regional coordinator, told the London meeting he hoped the licensing round would resume soon. In theory, with all the groundwork done, that could happen as soon as the president agrees, but it remains unclear when this might be or what, if any changes, he might want.

If Rajoelina merely wants to double-check a deal approved by his predecessor Hery Rajaonarimampianina — who failed to make it past the first round of the recent elections — then the delay could be brief. However, if his government wants to revisit the terms of the licensing round — or revise the country's petroleum code, which dates to 1996 — then that could prolong the process considerably, regional observers say.

Madagascar's onshore heavy oil deposits — notably the Tsimiroro and the Bemolanga fields, both located around 100km from the west coast — have long attracted investor interest, but offshore exploration has been limited. Of the 98 wells drilled in Madagascar, only eight have been drilled offshore, in shallow water, including six in the Morondava Basin.

These offshore wells failed to encounter commercial quantities of hydrocarbons. But TGS hopes the proximity of the heavy oil fields to the east and the large gas finds of East Africa to the west, together with evidence of gas in some of the previously drilled Madagascan wells and the availability of more detailed seismic mapping, will be enough to attract the explorers

There are indications from Antananarivo that the new government remains keen to push ahead with the development of the hydrocarbons sector, one of the few obvious ways to bring much-needed revenues into one of the world's poorest economies. But for now, all the licensing round organisers can do is wait.

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