Energy
Rak Gas terminates Malawi oil exploration venture
May 21, 2021 / Wahard Betha
UAE oil exploration firm Rak Gas LLC, which held exploration licenses for Blocks 4 and 5, has terminated its oil exploration activities in Malawi.
Rak Gas has become the last multinational oil search firm to pull out of Malawi following another Asian firm Pacific Oil and Gas (Block 6), South Africa’s Energy for Africa (Block 1), and recently Hamra Oil (Blocks 2 and 3).
Country Manager for Rak Gas Martin Kansichi Banda confirmed to Mining & Trade Review that just like Hamra Oil, Rak Gas has notified the Ministry of Mining that it is pulling out of Malawi because it is difficult to mobilise equipment and human resource for oil exploration in Malawi due to travel restrictions that countries are enforcing to fight the coronavirus (Covid-19) pandemic.
“Oil exploration programmes demand that we mobilise equipment and experts from overseas and this is difficult due to boarder restrictions countries are enforcing to fight Covid-19,” said Banda.
He said currently the Rak Gas Malawi office is settling all its taxation obligations to wind up activities with a clean book.
Commenting on the development, Chairperson for Natural Resources Justice Network (NRJN) Kossam Munthali said the relinquishment of the licenses by the oil and gas companies may not be related to Covid-19 but that as the country, Malawi is not ready in that direction in terms of issues to do with legislative environment.
Munthali said the country might be lacking direction in the oil and gas sector due to the legislative framework which is very outdated.
He said: “You may recall; these are the same companies that signed Petroleum Sharing Agreements less than a week to elections in 2012 and as Civil Society Organizations (CSOs) we were very shocked in terms of timing.”
“So this have told us that what they wanted is unachievable. They are only sending a signal to say we were not ready as a country.”
“I also hope wherever they go they will not speak bad of this country. If they were frustrated, then the government needs to do some setting and see how we can move.”
Munthali stressed that the country requires serious investors that can express demonstrative investment to sustainably exploit the minerals for the benefit of Malawians and not only for their own selfish course.
He also in order to attract the right investors, Malawi needs proper legislative architecture which is conducive not only to investors but also the people of the country.
Munthali said: “Petroleum Exploration and Production Act that we are using today is so archaic and dirty and is not speaking to the current practices.”
“The 1983 paper is a long overdue, we just need to quickly to go back to the drawing board.”
“This should be a wakeup call to the government to expedite review of the legislative framework.”
He also said though the country might not have serious investors for oil and gas, the upstream petroleum industry still be there and still belong to the nation.
He said: “Let me also remind the government that they need to provide us with figures on how much these companies have been contributing to the government through Petroleum Training Funds.”
“We need to know how we have managed to utilize these funds.”
Munthali said the last time he checked the records the companies were paying US$50,000 per block every year to the Malawi Government.
Coordinator for Chamber of Mines and Energy Grain Malunga commented that though the oil and gas investors have closed offices in the country, Malawi is still holds prospects in the future of upstream petroleum.
Malunga also said when the Ministry of Mining grants relinquishment certificates to the companies, it will have an opportunity to re-demarcate the big blocks.
“New companies will come in under re-demarcated exploration blocks. Good for Malawi. The blocks were too big,” Malunga said.
Meanwhile, the Ministry of Mining is still in the process of assessing whether the companies have met all obligations with both the government and local communities to be granted cancellation certificate.
But Minister of Mining Rashid Gaffar told Mining & Trade Review in a recent interview that government has no intention to block the companies from relinquishing the licenses.
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The establishment of a stable and self-sustaining ecosystem, but not necessarily the one that existed before mining began. In many cases, complete restoration may be impossible, but successful remediation, reclamation, and rehabilitation can result in the timely establishment of a functional ecosystem.
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