(The Anchor) HARARE – Zimbabwe is on its way to becoming an oil and gas producing country as early as next year following the signing of a memorandum of understanding (MOU) between the government and Geo Associates a joint venture company between One Gas Resources and Australian Stock Exchange Listed company Invictus Energy.
The MOU of Production Sharing Agreements (PSA) is made up of two agreements namely, the Petroleum Exploration and Development Production Agreement (PEDPA) and the Petroleum Product Sharing Agreement (PPSA). These are expected to give impetus to the accelerated attainment of the US$12 billion mining sector economy by 2023, said President Emmerson Mnangagwa, during the signing ceremony in Harare.
“The signing of this agreement represents major strides in our efforts to tap into our oil and gas deposits, which is a new territory in the country’s mining sector.
“The untapped oil and gas deposits present huge, unique and competitive investment opportunities, given that the industry has various potential downstream linkages,” said President Mnangagwa.
The agreements provide the framework of progression of the Muzarabani Oil and gas projects. It provides that Invictus Energy are entitled to exploit the resource, providing the pathways to the commercialisation of oil discoveries while the PPSA provides for the sharing of the resource between government and the investors.
The investor in the Muzarabani oil project, Invictus Energy halted trading of its shares on Australian Stock Exchange ahead of today’s signing ceremony, the second time in two weeks. The company has a smaller market cap of below A$80m.
Invictus Energy has since raised US$6 million in a private share placement to fund a seismic exploration in Muzarabani, the next steps towards the development of the gas prospect. The money will be used for a 2D seismic campaign. During this survey, explorers use sound devices to predict the location of oil or gas that could be enough for commercial exploration. This exercise helps companies to know where to drill exploration wells, as well as how to design the wells.
According to President Mnangagwa following this signing ceremony, the company will commence the first phase of the project which involves the sinking of two exploration wells which will be 4 kilometers deep and 1 meter in diameter.
The signing ceremony was witnessed by the Vice President, government misters, chairperson of the Zimbabwe Investment Development Agency (ZIDA). The government was represented by the minister of mines Hon Winston Chitando while Paul Chimbodza represented the investors.
Non-executive director of Invictus Energy Zimbabwe, Joe Mutizwa revealed that the investment is fully compliant with the indigenisation requirements of the country as locals through pension funds own a stake in the project.
“Mangwana Capital is one of the shareholders of Invictus Energy and through Mangwana Opportunities Fund, 31 Zimbabwean pension funds and asset managers hold a direct stake in the Muzarabani oil and gas project.
“This represents a significant indigenous ownership component in the potentially transformative investment for Zimbabwe,” said Mutizwa.
According to Mutizwa, to date, Geo Associates through the operator Invictus and partner One Gas has spent US$4 million and 90 man-months effort and has achieved a number of milestones to advance the project and is confident to discover commercial quantities of gas and oil in the Cabora Bassa Basin.
“The first part of our work program has consisted of re-evaluating the legacy geophysical and geological data and satisfying ourselves of the technical merits of the merits,
“We have now committed to the next phase of exploitation and in preparation of the on-ground exploration activities, we have undertaken an extensive environmental Impact assessment and community consultation exercise which is one of the largest ever completed in the country,” said Mutizwa.
The Muzarabani Oil and gas project began in 2017 following the awarding of special grant 4571 to Geo Associates Pvt Ltd. The area covered by the special grant was previously explored by Mobil in the early 1990s as part of their oil exploration in the Zambezi valley. Geo Associates is the first company to explore for oil and gas since Mobil left in 1994. In April 2018, Invictus Energy an ASX listed company based in Australia acquired 80% stake in Geo Associates and became the project operator.