Oil, gas firm commits to long-term presence in Zim
AUSTRALIA Stock Exchange (ASX) listed Invictus Energy, says it will continue to scout for commercially viable oil and gas deposits in Zimbabwe, even if the upcoming exploration drilling programme does not yield any hydro-carbons.
Invictus Energy will drill the first of its two exploration wells at the end of this month or the first week of September to test the potential presence of petroleum deposits within its prospective area in Mbire and Muzarabani districts of Mashonaland Central.
After completing the first well in Mbire district of Mashonaland Central, the company would require two to three weeks to translocate the drilling rig to the second well site in Muzarabani.
Company executives indicated recently that the first well, drilled to a depth of four kilometres, will take up to about 8 weeks and the second, expected to be 1,5 kilometres deep, would require about six weeks to complete.
Evidence from seismic studies conducted on the Australian company’s prospective area, which was independently evaluated by foreign experts, has demonstrated that the area holds significant potential to host massive deposits of hydrocarbons.
Invictus has since mobilised an Exalo drilling rig from Songo Songo in Tanzania, where the equipment was contracted for similar work, to undertake the exploratory drilling at its Mukuyu-1 and Baobab sites in Mbire and Muzarabani, respectively.
The drilling will mark the first time in the history of oil and gas exploration in Zimbabwe that test-drilling is undertaken to prove presence of petroleum deposits in the country after earlier investigations by US oil giant Mobil terminated at the seismic study level.
GeoAssociates, the majority shareholder in Invictus Energy director, Paul Chimbodza, told journalists during a recent tour of the Mukuyu-1 site that failure to discover commercially viable oil and gas deposits would not mean the end of its presence in Zimbabwe.
The Mukuyu-1 well will target an estimated 20 trillion cubic feet and 845 million barrels of conventional gas condensate, which were recently upgraded by European petroleum consultant ERCE, resulting in a 2,7 percent increase in the initial resource estimate.
From the company’s perspective, Mr Chimbodza said, the success of the drilling programme would not be defined by commercial discovery of hydrocarbons, but the depth of the technical data to be obtained from analysis of the testing drilling results.
“It is inherent in our business that you can find or you don’t find, so if we don’t find anything, there are technical ways in which to plug off the well, that is also contained within our environmental management plan, but that is not the end of the story for us.
“We earlier on indicated that we have just concluded an agreement that we will be extending our search area, so we will continue looking for other potential sites, a costly exercise but that is the name of the game,” Mr Chimbodza said.
Already, the company has invested US$16 million into the project while a similar amount would be spent on the Mukuyu-1 test well. A lesser amount, US$10 million, will be spent on testing the potential of the Baobab site for any oil and gas resource.
“Speaking from a geological perspective, positive results for me as a geologist, are not just us encountering hydrocarbons but it is the depth of information that we get from this 3,5 to 4 kilometre well.
“As we drill, we have got these special pieces of equipment that we send down the hole that give us a lot of technical advice and technical information, which information feeds into the national geological database. So, it is not a lost cause if we do not find anything,” he said.
Invictus managing director, Scott MacMillan, earlier said the Mukuyu-1 prospect had grown significantly in its scale and now represented one of the largest conventional exploration targets globally.
“This updated estimate is the culmination of the excellent work from the Invictus technical team over the last 12-18 months to deliver this result in the lead up to our drilling programme.
“The estimate for the newly identified 200 horizon in the Dande formation within Mukuyu is 1,9 Tcf + 77 mmbbl, which provides us with a material first up target in the Mukuyu-1 well,” he said.
Invictus deputy chairperson, Joe Mtizwa, said after the drilling programme, “Zimbabwe would be a different place”.
Following approval from President Mnangagwa, a Petroleum Exploration Development and Production Agreement (PEDPA) was executed between Invictus’ 80 percent owned subsidiary, Geo Associates and the Republic of Zimbabwe in April last year. The agreement was signed on behalf of the Government by Mines and Mining Development Minister Winston Chitando at State House in Harare.
The signing of the (PEDPA) 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,” President Mnangagwa said.
Commercial discovery of oil and gas in Mbire and or Muzarabani, the Head of State and Government noted, would also result in significant job creation, growth in exports, energy self-sufficiency and development of several downstream industries.
The PEDPA provides the framework for progression of the Cahora Bassa (Muzarabani) Project through the exploration, appraisal, development and production phases, the obligations and rights of each party, the minimum work programme obligations to maintain the licence in good standing, and the security of tenure for the project duration.
The PEDPA provides the licence holder the right to enter into a 25 year production licence following the exploration periods.
It also provides for Special Economic Zone (SEZ) status for the Cahora Bassa Project which will facilitate a host of fiscal and non-fiscal incentives over the life of the project including legal and fiscal stability, offshore banking, zero capital gains tax, tax holiday periods and 15 percent corporate rate thereafter.
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