Twist on lake Oil exploration

Government will hold talks with Rak Gas, one of the firms searching for oil and gas in Malawi, to clear misunderstandings on licence awards and product sharing agreements before a final decision is made on the firm’s future exploration possibilities.

This means that although government has lifted a ban on oil exploration, mostly on Lake Malawi, Rak Gas, a company allocated blocks Four and Five on the lake, will not yet join the others to resume exploration.
Government last week announced that President Peter Mutharika has ordered the resumption of the oil and gas exploration exercise on the lake and offshore almost a year after the suspension of the exercise.
Minister of Energy and Mining Minister Bright Msaka confirmed in an interview with Nation on Sunday that the exploration will in the meantime involve blocks One, Two, Three and Six.
“We are going to reinstate block One, Two, Three and Six. We have issues with Four and Five. There are no Production Sharing Agreements on these blocks, too. Malawi government is requesting foreign governments to help us with expertise on production sharing agreements.
“The President is clear the production sharing agreements should benefit Malawians. We will only proceed with this only if the nation and the President is satisfied and the production sharing agreement is beneficial to Malawians,” said Msaka.
However, Msaka insisted that a final decision on blocks Four and Five will only be made after the companies have been allowed to defend themselves on the issues, but he did not specify on the issues.
Lake Malawi is divided into six segments for oil and gas exploration with block One awarded to Sac Oil Holdings Limited of South Africa in 2012 whereas Block Two and Three were awarded to a British firm Surestream Petroleum in 2011, but in 2013 Hamra Oil Holdings acquired a 51 percent stake in the Surestream licences. Blocks Four and Five were awarded to Rak Gas in July 2013 whereas the sixth block went to Pacific Oil.
Rak Gas is owned by the government of Ras Al Khaimah, one of the emirates of the United Arab Emirates, but the legal opinion by the Attorney General Kalekeni Kaphale described the production sharing agreements which government signed with some companies exploring oil as irregular.
Rak Gas representative Chimwemwe Chikuse yesterday said the company has received communication from government to engage it in negotiations on the deal but said there have been no threats of cancelling the contacts.
“I may not know what other communication has been sent to our headquarters but we can confirm that we were invited to the Ministry and informed that at the moment government wants a few clarifications. The process appears cordial and constructive and we have welcomed it. We are yet to discuss the exact issues but everything will be sorted out through negotiations,” said Chikuse.
Meanwhile, in a joint statement last week, a coalition of 16 civil society groups working on environment and mining issues under the banner of Natural Resource Justice Network (NRJN) have condemned lack of transparency and a culture of secrecy surrounding mining and oil exploration deals from the start.
NJRN says there is no public evidence that the process of awarding licences was done transparently and openly to attract the best and highest bidder and called upon government to publish all the transactions and payments surrounding the deal.
The civil society groups have since called upon government to review the 33-year old Petroleum Exploration and Production Act, describing the 1983 Act that regulates oil production as outdated.
Some communities around Lake Malawi, especially those under the Karonga Developmet Community Organisation—-an umbrella body of NGOs operating in Karonga—-had previously expressed concern with government’s delay to act on the licences, saying ordinary people had to benefit from  the lake resources. n