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Oil & gas: Company abandons project

Mining industry

By Wezzie Gausi:

Malawi’s prospects of becoming an oil and gas producing country are diminishing by the day as United Arab Emirates (UAE)-based company, Hamra Oil Holdings Limited, has surrendered prospecting licences to the Malawi Government, saying operations in Malawi are no longer viable due to the coronavirus pandemic.

Hamra Oil, which acquired the licence from Surestream Malawi Limited in 2015, will be the second company to abandon the oil and gas exploration venture following the relinquishing of the prospecting licence by South Africa-based SacOil Holdings in 2019.

This means three of the six blocks that were demarcated in 2012 have been abandoned.

Initially, the government demarcated six blocks for oil and gas exploration, with South Africa-based company SacOil taking 1 which is in Chitipa District, Blocks 2 and 3— from Karonga to Nkhotakota districts—were licenced to Surestream before Hamra Oil Holdings Limited acquired majority shares, and Blocks 4 and 5—from Nkhotakota to Mulanje districts— went to RakGas while Block 6—from Mulanje to Nsanje districts— was licenced to Pacific Oil. Block

However, closer to a decade after the first licence was issued, the country is yet to be informed on whether it has the black gold and whether the country will become an oil and gas producer any time soon as companies are abandoning ship.

Hamra Oil Holdings Limited, in a written response to a The Daily Times questionnaire, issued a statement that confirmed that the company was leaving the country, citing coronavirus as the reason.

In the statement, the company said, from April 2020, Hamra Oil’s activities under the prospecting licences for Blocks 2 and 3 were necessarily suspended because of the impact of the coronavirus pandemic.

“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.

The statement further said, the company has contributed to the local economy.

“We have met all of our obligations in the Prospecting Licences concerning activity and spent 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.

Principal Secretary in the Ministry of Mine Joseph Mkandawire also confirmed that Hamra Oil Holdings Limited (Hamra) submitted notices to terminate their licences for oil and gas exploration for Blocks 2 and 3.

Mkandawire, however, said the government was yet to terminate the licences as the ministry was working on a number of issues as required by the Upstream Petroleum law. “Where there are outstanding issues, the company will be asked to settle them before their request is approved,” he said.

Mkandawire further said the departure of Hamra did not mean that oil and gas exploration activities would stop, adding that other investors would still be coming to the country to look for opportunities in the Upstream Petroleum Sub-sector.

“The works that Hamra conducted will provide a considerably sound basis from which other companies can advance their oil and gas exploration activities and possibly make a discovery to the benefit of the country. Exploration is an on-going exercise and government will continue regulating exploration activities on behalf of Malawians,” he said.

But Chairperson for Natural Resources Justice Network Kossam Munthali believes that what Hamra has done is uncalled for.

“From what we understand, this licence exchanged hands several times before it went to Hamra. What does that mean? It means there is something that the government does not want people to know.” Parliament should intervene in the issue,” “Munthali said.

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