Two oil exploration firms, Efora Company, formerly Sac Oil, and Pacific Oil Limited have relinquished ownership of their licensed blocks one and six, respectively, a move government says will not affect operations.
The Malawi Government issued six oil and gas exploration and production licences in which 60 percent lies outside the lake.
The country granted its first oil and gas exploration licences in 2012 in accordance with the Petroleum Exploration and Production Act of 1983.
In a letter addressed to the Ministry of Natural Resources, Energy and Mining, Efora Energy Limited vice-president (commercial) Willem de Meyer said the firm’s attempts to find a partner have been unsuccessful due to the depressed nature of the exploration cycle.
“Although Efora recognises the potential for further exploration in block one, the company does not wish to extend its exploration commitments any further at this stage.
“Efora has identified the presence of volcanic sills underlying the miocene deposits in block one as a substantial geological risk and would not want to continue its exploration effort without being able to share the risk with a partner,” said Meyer.
In an earlier communication to the ministry dated July 7 2017, the company’s then chief executive officer Thabo Kgogo indicated that to mitigate the risk, Efora had set out to find a partner for the concession to share the risk.
As of July 2017, he said th firm had spent $485 331(about K220 million) on its work programme and did not foresee spending $100 000 (about K76 million) until block one came up for renewal.
The firm had since applied to the ministry to reduce its financial commitment to $600 000 (K452 million).
The ministry’s head of gas and oil Cassius Chiwambo said government will now identify another capable company to pursue the exploration activities.
“Both companies submitted their reports which clearly indicated the likelihood of finding commercially viable quantities of petroleum in blocks one and six,” he said.
The contribution of mining and quarrying activities to the country’s gross domestic product (GDP) has remained meagre at below one percent since 2010.
The sector is expected to grow by 3.6 percent, according to the Reserve Bank of Malawi (RBM).
The Malawi government has also produced the Petroleum Policy, which is expected to be presented to Cabinet this month.
It also initiated the review process of the 1983 Petroleum Act which, according to Chiwambo, is at an advanced stage.