The Sunday Mail
Lincoln Towindo
AUSTRALIAN Stock Exchange-listed firm, Invictus Energy, has hailed Zimbabwe’s “pro-business and promotion of investment” stance, which has seen the country transform into an outstanding investment destination.
Invictus is close to sealing a Production Sharing Agreement (PSA) with Government as the miner inches closer to drilling at its Muzarabani oil and gas prospect.
A PSA is a contract signed between a Government and a resource extraction company, which lays down how much of the resource each party will receive once extraction commences.
In March, Government set up a high-level technical committee for the PSA, which is chaired by Finance and Economic Development Secretary Mr George Guvamatanga.
Drilling of the miner’s US$20 million exploration well must be preceded by a PSA in line with oil extraction industry protocols.
In a video conference with an Australian online publication last week, Invictus managing director, Mr Scott Macmillan, said Zimbabwe has transformed into an outstanding investment destination owing to the pro-business reforms implemented by Government.
Invictus is exploring for oil and gas in the Muzarabani prospect, which has been described as one of the largest conventional oil and gas fields in the world and is larger than the two largest gas fields discovered over the last two years.
Initial estimates show that the Upper Angwa gas prospect is significantly larger than the Brulpadda block, discovered off the coast of South Africa by French energy giant Total in February last year and was described by President Cyril Ramaphosa as an economic “game-changer”.
Government has already granted priority project status to the Muzarabani oil and gas venture, meaning the project will be fast-tracked through various approval processes, including the finalisation of the PSA.
Mr Macmillan said repealing of the indigenisation regulations by Government had made Zimbabwe an attractive investment destination. He said the Muzarabani oil and gas find was “staggering” and holds massive potential.
“So why did we choose Zimbabwe? Primarily because of the asset,” said Mr Macmillan.
“I first came across the asset 10 years ago and I was staggered by the potential. Mobil had done a lot of work in the early ’90s but discovered that it was likely to be more gas than oil and there was no regional market for gas at the time so they relinquished it untouched.
“And Zimbabwe had also been a very difficult jurisdiction to work in for the last 20 years but that has also changed. The new Government is pro-business, promoting investment and has implemented a lot of pro-business reforms including amending the Indigenisation and Economic Empowerment Act and now allows for 100 percent foreign ownership of assets and guarantees investor rights.”
Mr Macmillan revealed that finalisation of a new PSA with Government would provide a transparent legal and fiscal framework.
“The Special Economic Zones which have been implemented in the country provide you with good legal and fiscal stability. They also provide some very friendly tax treatment as well as offshore banking and transacting outside of the local financial system, meaning you are ring-fenced from what is happening domestically.”
The Muzarabani prospect contains potentially the largest, seismically defined and undrilled structure onshore Africa.
Results of an independent assessment of the Cahorra Bassa Basin undertaken by Getech Group Plc last year showed further improvement of oil and gas discovery in the Muzarabani prospective area. The findings strongly support the possible existence of 1,3 billion barrels of oil equivalent (BOE) or alternatively an estimated resource of 206 billion litres of oil in the Cahora Bassa Basin in Muzarabani.
Mr Macmillan said Invictus was in discussions with several investors regarding sealing its farm-out process. United Kingdom-based firm ENVOI is leading the farm-out process.
“At the moment we are on the business end of our farm-out process and that is at an advanced stage. We are in discussions with multiple parties and that is to participate in a high impact basin opening well. Since acquiring the licence two years ago we have undertaken substantial geological and geophysical work programmes to de-risk the asset.
“What we have identified is that all the ingredients required for a working petroleum system are present in the Cahorra Bassa Basin. Source, reservoir and seal have all been sampled at outcrop and we have mapped it into the subsurface and we are confident of its presence within the prospects that we have identified,” Mr Macmillan said.
He said Invictus has already begun monetising the prospect through signing Memoranda of Understanding (MoUs) for the supply of gas to local and regional companies.
Last year, the miner inked a Memorandum of Understanding with Tatanga Energy to assess the commercial viability of supplying gas to Tatanga’s proposed 500 megawatt (MW) plant that will supply electricity to the national grid as well as Zambia and Mozambique.
Previously, Invictus had also secured a deal to supply Sable Chemical Industries with 70 million cubic feet of gas per day for a 20-year period to replace imported ammonia for the production of fertiliser.
“There is also a substantial local and regional gas and liquids market we are targeting, that is currently supply constrained and provides a pathway for us to monetise volumes of gas as well as oil.
“We have de-risked it from a commercial perspective having signed a gas sale MoU with Sable Chemicals who are an existing fertiliser manufacturer in Zimbabwe as well as Tatanga Energy, a gas to power developer,” Mr Macmillan said.
He said Invictus has first mover’s advantage, although it is a frontier prospect because it is undrilled.
“We have inherited a A$30 million dataset acquired by Mobil in the early 1990s including seismic, geochemical, gravity and aeromagnetic data. What we have identified in this potential basin is pretty staggering.
“In terms of what it is we are looking at, when you enter a new place the company that secures first-mover advantage generally gets the best acreage and secures the most lucrative markets because they are the first.
“You can have some truly tremendous upside when you make a discovery, typically when you enter first you tend to choose the best parts,” said Mr Macmillan.
