By Wezzie Gausi:
More than a decade after Malawi opened parts of Lake Malawi and other areas for oil and gas exploration, the country seems to have all but dumped the dream of ever extracting oil.
And an expert has since questioned whether Malawi really ever meant to move beyond paperwork and speculation.
What once looked like a promising sector in Malawi’s extractives industry seems to have trickled down into a dark tunnel, where it has possibly choked to death, worse so with the exploration companies abandoning their licences and government not being clear about their exploration findings.
It was a flurry of promising activity then.
- Advertisement -
In 2011, government awarded two blocs to British company, Surestream Petroleum, a company whose revitalization of the now derelict-again Chilomoni Stadium in Blantyre became one of its signature corporate social responsibility interventions.
In December 2012, government awarded South Africa’s Sac Oil Holdings Limited an exploration licence for one bloc.
In July 2013, RakGas of the United Arab Emirates got licensed for two blocs.
The Seychelles-based Pacific Oil got the sixth bloc.
- Advertisement -
- Advertisement -
Then, the dream started disintegrating.
In what might have been a convenient retreat, in 2013, Surestream gave away 51 percent of its exploration licence to Egypt’s Harma Oil.
In 2019, Pacific Oil Limited and Sac Oil Holdings let go their ownership of their blocks.
Hamra Oil Holdings was the last to leave in March 2021.
In a statement about its abandonment of its project, Hamra said from April 2020, it has suspended its activities because of the impact of the coronavirus pandemic and that Malawi’s operations were no longer viable.
“Following the prolonged and continuing suspension, Hamra Oil took the difficult decision earlier this year to surrender the prospecting licences as the company’s operations in Malawi were no longer viable,” the statement reads.
If further said:
“We have met all of our obligations in the prospecting licences concerning activity and spend by making significant investments in exploration activities including an extensive Environmental Impact assessment, the acquisition of a Full Tensor Gravity Survey, the purchase of aeromagnetic survey data and the reprocessing of existing seismic data.
“All of the data and reports from the above work have been provided to the Ministry of Mines and are available to serve as a starting point for future explorers in the blocks,” the statement reads.
We contacted Ministry of Energy for its comment on the current state of affairs with regard to oil exploration. It did not share any response.
But speaking to The Daily Times in April 2024, the ministry also cited the Covid-19 impact. It said when Covid-19 hit, companies left after just 40 percent of the work.
It further said due the stress that Covid caused to the global economy, it proved difficult for the companies to get funding to continue with the exploration work.
It said it was looking for new investors to come in and pick from where the other companies had left using data set they came up with.
Todate, there is no exploration work going on.
Energy expert Grain Malunga added that Malawi’s system is riddled with administrative delays, one of the factors which he said influenced Hamra’s withdrawal.
“This is a common problem in Malawi,” he said, a statement that exposes how Malawi’s oil ambitions were unlikely to move from exploration stages to production.
He said whatever activity Malawi has conducted regarding the country’s oil prospects, there is no evidence that would determine whether commercial oil reserves truly exit in Malawi.
“Drilling and feasibility studies have not been conducted yet,” he said.
If Malawi is to, at all, get to a stage where it can have a clear picture of availability of oil reserves in Lake Malawi, that needs to start with addressing several conditions, he said. Malawi needs political will, stakeholder support and responsible public discourse.
Mining and energy experts have also questioned whether Malawi rushed into signing exploration agreements before establishing strong technical, legal and institutional systems to support the industry.
They have argued that Malawi entered the sector with weak laws, inadequate regulatory capacity and limited public awareness on how the industry operates and that government created unrealistic expectations among citizens before enough scientific work had been completed.
During the early days of exploration, many Malawians believed oil discovery was almost certain, creating excitement that the country would soon join oil-producing nations.
