By Wahard Betha
A grouping of Civil Society Organizations (CSO) working in the extractive sector, the Natural Resources Justice Network (NRJM), has asked the Malawi Government to fast track the review process of legal and policy frameworks governing the oil and gas subsector before new investors acquire hydrocarbon exploration licences.
Coordinator for NRJN Kennedy Rashid said in an interview that this is the opportune time for the Government to finalise working on the legal and policy frameworks as all the petroleum exploration companies have relinquished their licenses.
Government is yet to finalize the formulation of a new Petroleum Exploration and Production Act to replace the 1983 law, develop a Petroleum Policy and model Production Sharing Agreement.
Rashid said: “The subsector itself is so lucrative such that Malawi stands to get enormous benefits if it is developed. But the fact that up to now Government still has not finalized some of the legal and policy frameworks governing the subsector manifests that we are not ready for the industry.”
“We need to update our legal and policy framework to be in line with current international best practices in oil and gas production.”
“We believe that if we can revisit our legal and policy frameworks and develop a new strategy for the subsector we can establish a strong upstream petroleum industry. Investors do not just want to invest but to make profits and benefit from areas where they invest in.”
Public Relations Officer in the Ministry of Mining Andrew Mkonda, however, told Mining & Trade Review that the delays are not due to lack of seriousness by government but that the documents are being scrutinized by different ministries as the formulation of legal and policy instruments cannot be done by a single Ministry.
Mkonda said: “All the documents, including the draft model Petroleum Sharing Agreement (PSA), are going through Ministries, Departments and agencies as a consultative process.”
“After that we will consult other non-governmental stakeholders. So for now that is the response I can give.”
Currently, all six oil and gas blocks are vacant following relinquishment of hydrocarbon search licenses by the investors.
Pacific Oil Limited was the first firm to leave Malawi vacating Block 6 covering the lower Shire Valley area before EFORA Energy (formerly SacOil) relinquished its licence for Block 1 covering Chitipa and parts of Karonga followed by Hamra Oil Holdings Block 2 and 3 covering the Lake Malawi area of Karonga, Nkhatabay, and Nkhotakota and then Rakgas Block 4 and 5 covering lakeshore and Shire River sides of Dedza, Machinga, Mangochi, Blantyre, Zomba, Mulanje, Thyolo and Phalombe.
Since the four companies closed shop, the Government is yet to officially advertise the blocks to attract new investors.
However, there are concerns that the blocks are too big to be handled by one investor which have attracted calls for demarcation of the blocks before new investors acquire the tenements.
The re-demarcation process is supposed to be conducted in tandem with provisions of the new Upstream Petroleum Policy and the Petroleum (Exploration and Production) Act 1983, currently being reviewed by the Government.
Malawi’s Petroleum Law is considered outdated because it was enacted during the one party era hence gave absolute ownership of petroleum resources to the Life President on behalf of the People of Malawi.
Based on the existing Law, in 2009 Malawi developed Petroleum (Exploration and Production) regulations which provided legal basis for the demarcation of the six Oil and Gas Blocks in Malawi.