A year ago, we were watching Madagascar's oil and gas industry, and the signs were not promising as demonstrators rampaged in the streets and set fire to an oil depot (OGJ, Feb. 2, 2009, p. 34).
The trouble erupted when the government closed a radio station belonging to the opposition party whose leader, Andry Rajoelina, said two protesters were killed in the affray.
President Marc Ravalomanana had earlier accused Rajoelina of promoting the government's overthrow and declared that the government would act decisively to "restore order" on the island nation.
Well, that hasn't happened, and the oil and gas industry has suffered. Oh, to be sure, China's Shaanxi Yanchang Petroleum Group Co. Ltd. (SYPG) last week did buy 15% of Hong Kong's Sino Union, a firm that operates oil blocks in Madagascar.
Yanchang buys in
SYPG, together with Sino Union and Hong Kong and China Gas Co., plans to set up a joint venture to develop and operate two oil fields—on Blocks 3113 and 2104—which have combined reserves of 5.6 billion bbl of oil.
But the Chinese firms may have to wait a while before getting on with their work, as the political crisis that erupted a year ago continues to disrupt the country's oil and gas industry.
Indeed, just last month, a top official of the country confirmed that Madagascar had delayed the auction of 50 offshore Indian Ocean oil blocks until this year's second half after months of political turmoil worried foreign investors.
Joeli Lalaharisaina, acting director general of the Office of National Mines and Strategic Industries (Omnis), told Reuters in an interview he expected exploration activity to pick up after a marked slowdown in 2009.
"The auction was supposed to take place in November but given the political crisis…we have been forced to push it back until next year. That's if everything goes well," he said.
'Just temporary'
According to Lalaharisaina, the sale of exploration rights, which will see the number of 2,000 sq km offshore blocks available increase from 6 to more than 50, was now scheduled for August or September.
The delay followed a military-backed coup in March 2009, and it was followed by threats to revise existing contracts with international oil companies. In fact, according to Lalaharisaina, ExxonMobil Corp. was still waiting to return its staff to Madagascar.
"It's a major worry right now that investors might pull out. Right now we are trying to reason with them, to make them understand the crisis is temporary," he said.
Yes, of course, the crisis is "just temporary" as are all things in life. But investors want something more definite than that.
"Madagascar will encourage any company which wants to build a refinery here, but for the moment there are no plans and it is too expensive for the state to consider," Lalaharisaina said.
Could it be too dangerous, as well?
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