Related Articles
Forward article link
Share PDF with colleagues

Madagascar unveils new offshore acreage

The island nation hopes it can emulate hydrocarbons finds in neighbouring Mozambique

Madagascar launched its first licensing round since 2006 in November, offering 44 offshore blocks in the Morondava Basin off the western coast, covering acreage totalling 63,296km².

The launch, at the annual Africa Oil Week conference, came just one day before Madagascar held its first round of presidential elections. But officials at Omnis, the state body overseeing the round, decided to push ahead with the launch to take advantage of the showcase offered by the Cape Town event. They hope any change of political leadership will not affect the licensing timetable.

"We have already missed a lot of opportunities to promote our resources… we don't want to miss any more occasions," Voahangy Nirina Radarson, the director general of Omnis, said at the licensing round launch.

She said several international oil companies had expressed interest in the bid round since it was first mooted in 2017. Madagascar hopes that the proximity of its offshore acreage to Mozambique's huge gas reserves will make exploration attractive to foreign firms.

The licensing round runs for six months to 30 May next year, after which there will be a three-month evaluation period. Omnis is holding roadshows in London on 19 February and Houston on 26 February. Seismic firm TGS will host data viewing sessions in both cities. A mandatory data package, including seismic data covering the basin and data from half a dozen previously drilled offshore wells and three adjacent onshore wells, is available at a cost of around $340,000, according to TGS.

Source: Petroleum Economist

Showing potential

The production-sharing contracts on offer provide for an exploration period of eight years, with a possible two-year extension. Any exploitation period would be 25 years for oil and 35 years for gas, with an optional five-year extension. Work programmes will be judged on how full their assessment of block potential is likely to be, Omnis said.

The country has seen some hydrocarbons activity in recent years, notably an onshore heavy oil development by Madagascar Oil and, in 2017, exploration PSCs were agreed with BP for four blocks surrendered by ExxonMobil. But the licensing round offers a step up in exploration opportunities.

The frontrunners in the first round of the election were incumbent president Hery Rajaonarimampianina and former presidents Marc Ravalomanana and Andry Rajoelina. At the time of writing, the outcome had yet to be announced, though early results suggested Rajoelina and Ravalomanana were neck-and-neck in front. If no contender gets more than 50pc of the vote, which seems likely, there will be a run off on 19 December.

The election in 2009 triggered a change of power with Rajoelina taking over in what the African Union described as a coup. But the last polls, in 2013, resulted in a peaceful handover to the victor, Rajaonarimampianina, and heralded a period of more open engagement with foreign investors and the international community in general. EU observers reported only "minor irregularities" in November's vote and said they would not affect the outcome.

Whatever happens, it seems unlikely that a new president would seek to scupper the licensing round, given the potential of any future oil revenues to transform the economy of the impoverished country, regional analysts say. Gross national income per capita for the population of almost 26mn is just $400, among the lowest in the world, according to the World Bank.

Also in this section
Petrobras pulls back spending
18 September 2020
Spotlight falls on pre-salt production as Latin American NOC dials down capex
Latest licensing rounds
15 September 2020
The industry's most comprehensive list of current and recent rounds for onshore and offshore licences
Pemex scales back upstream goals
11 September 2020
The strained producer downgrades its 2021 forecast as rapid economic recovery looks doubtful