Madagascar hopes for onshore oil

PORT LOUIS – Madagascar may soon see the first signs of commercial viability for its onshore oil and gas reserves when a private firm completes its exploration in coming weeks, a presidential adviser said on Tuesday.

Andry Ralijaona, adviser on governance, mines and oil, said that Madagascar Oil, a company searching onshore for oil and gas, was due to sink a test well in coming weeks. “We know there is oil, but now you have to have a better knowledge of the pressure underground, other technical parameters, and the size of the reserve,” he said by telephone from Madagascar’s capital, Antananarivo.In March, Madagascar Oil, which has its headquarters in Houston but is domiciled in Bermuda, borrowed US$85 million to develop two heavy oil projects in the Bemolanga and Tsimiroro fields in the northwest of the Indian Ocean island.Describing Bemolanga as one of the largest undeveloped bitumen reserves in the world, the company’s Web site says the two fields have 9,8 billion and 2,6 billion barrels of recoverable reserves, respectively.Madagascar has issued a total of 19 permits for onshore oil exploration, which stretch along the western coast.The last licence was granted in November 2006.The permits for onshore and offshore exploration cost an average US$100 000 per year, depending on factors such as existing knowledge of the block’s known reserves, Ralijaona said.Meanwhile, ExxonMobil – whose US$39,5 billion profit last year was several times larger than Madagascar’s GDP – is one of several companies looking for oil offshore.”Their test well is scheduled for next year, depending on the availability of exploration rigs,” Ralijaona said, adding that there was currently a shortage of deep-water rigs.Besides oil, an incipient commodities boom in Madagascar is set to include nickel, cobalt, bauxite, and ilmenite – the ore of titanium dioxide.Explorers are also looking for gold, coal, chrome, gemstones, and uranium.Observers worry that rapid growth of oil and mining could damage Madagascar’s roughly US$6 billion economy by distorting exchange rates and fostering corruption.Ralijaona was talking ahead of a national conference to discuss Madagascar’s implementation of the Extractive Industries Transparency Initiative.The initiative – launched by British Prime Minister Tony Blair in 2002 – aims to ensure oil, mineral and gas reserves are properly used to foster economic growth and reduce poverty.Madagascar says it will try to maximise the oil and mineral wealth benefits for its 19,6 million people.Nampa-Reuters”We know there is oil, but now you have to have a better knowledge of the pressure underground, other technical parameters, and the size of the reserve,” he said by telephone from Madagascar’s capital, Antananarivo.In March, Madagascar Oil, which has its headquarters in Houston but is domiciled in Bermuda, borrowed US$85 million to develop two heavy oil projects in the Bemolanga and Tsimiroro fields in the northwest of the Indian Ocean island.Describing Bemolanga as one of the largest undeveloped bitumen reserves in the world, the company’s Web site says the two fields have 9,8 billion and 2,6 billion barrels of recoverable reserves, respectively.Madagascar has issued a total of 19 permits for onshore oil exploration, which stretch along the western coast.The last licence was granted in November 2006.The permits for onshore and offshore exploration cost an average US$100 000 per year, depending on factors such as existing knowledge of the block’s known reserves, Ralijaona said.Meanwhile, ExxonMobil – whose US$39,5 billion profit last year was several times larger than Madagascar’s GDP – is one of several companies looking for oil offshore.”Their test well is scheduled for next year, depending on the availability of exploration rigs,” Ralijaona said, adding that there was currently a shortage of deep-water rigs.Besides oil, an incipient commodities boom in Madagascar is set to include nickel, cobalt, bauxite, and ilmenite – the ore of titanium dioxide.Explorers are also looking for gold, coal, chrome, gemstones, and uranium.Observers worry that rapid growth of oil and mining could damage Madagascar’s roughly US$6 billion economy by distorting exchange rates and fostering corruption.Ralijaona was talking ahead of a national conference to discuss Madagascar’s implementation of the Extractive Industries Transparency Initiative.The initiative – launched by British Prime Minister Tony Blair in 2002 – aims to ensure oil, mineral and gas reserves are properly used to foster economic growth and reduce poverty.Madagascar says it will try to maximise the oil and mineral wealth benefits for its 19,6 million people.Nampa-Reuters