Invictus to sink US$25m into oil exploration wells

Source: Invictus to sink US$25m into oil exploration wells | The Herald

Invictus to sink US$25m into oil exploration wells(From right) Home Affairs and Cultural Heritage Minister Kazembe Kazembe, Energy and Power Development Minister Zhemu Soda, Mashonaland Central Provincial Affairs and Devolution Minister Senator Monica Mavhunga, Invictus Energy board chairperson Mr Stuart Lake and the company’s senior management at a meeting with the Muzarabani community

Golden Sibanda
INVICTUS Energy, the Australian firm searching for oil and gas in Muzarabani, Mashonaland Central Province, will sink US$25 million into drilling two exploration wells to determine whether its special grant (SG 4571) area holds petroleum deposits.

Study findings, independently assessed by international experts in the evaluation of hydro-carbons data, have shown encouraging results supporting potential existence of oil and gas within Invictus’ Muzarabani prospective area.

The process entailed refining a US$30 million data set gathered by French oil giant Mobil in the early 1990’s using the latest computer software and gathering additional data last year using vibroesiss (sound picking) machines, to identify potential target rich oil/gas locations.

A lot has changed since then in the energy industry, with gas now a major and in demand source of energy, which Invictus intends to market in the country and the region, especially South Africa.

Ongoing exploration by Invictus represents only the first time in nearly 30 years Zimbabwe has witnessed serious exploration, since the Mobil excursion, which indicated the area to have more potential for gas than oil.

Commercial discovery of oil and gas in Muzarabani and Mbire could open the floodgates of new exploration investment into hydrocarbons across mineral rich Zimbabwe.

And in a confirmation of the company’s commitment to the huge investment, the entire Invictus board led by chairman Stuart Lake and chief executive Scott MacMillan toured the project site in Muzarabani on Monday.

Several senior Government officials, including Mashonaland Central Minister of State for Provincial Affairs and Devolution Senator Monica Mavunga, Energy and Power Development Minister Zhemu Soda and Home Affairs Minister Kazembe Kazembe were also present.

A total of eight chiefs from the Mashonaland Central were also part of the entourage that visited the project site to witness the early stages of a potential historic breakthrough in the economic transformation of Zimbabwe.

Geo-Associates, Invictus Energy controlling shareholder, Mr Paul Chimbodza, told delegates during the site tour, that the company had thus far invested US$12 million and would outlay a further US$25 million to drill the two exploration wells.

He said the drilling programme was expected to commence at the end of June or early May this year. British firm Exalo rig number 202, was contracted to undertake the drilling, and would be repatriated from Tanzania’s Songo Songo area from May 15, 2022.

The Australian firm will drill two wells; one 4km deep and the second shorter one will be drilled to a depth of about 2km. In conventional borehole drilling the deepest wells are normally about 100 metres.

“We always view this project as a potential game changer, not only for Mbire- Muzarabani, but for Zimbabwe and the region. Once we have got commercial discovery our hope is that Zimbabwe can be energy sufficient as far as electricity is concerned.

“We know how our country has been battling with power cuts. With Muzarabani-Mbire being successful it’s very easy for us to be able to generate enough electricity not only for the whole of Zimbabwe, but probably pushing that into the region.

Minister Soda said the Government was very excited about prospects for oil and gas, especially seeing how the impact of war in Ukraine has sent petroleum prices soaring globally.

“We are very much excited about this project and the (potential) discoveries in our area. We are very optimistic that the project is going to bring a lot of developments to the people, beginning with creation of employment.

“(This) is the actual thrust of the Second Republic…it has been the call by the President that a lot of investors come to Zimbabwe, when he always says Zimbabwe is open for business.

“You have actually heeded the call to come and invest in Zimbabwe and the creation of employment, and the creation of employment we know is going to be inevitable.

“It is going to be a game changer the way I look at it, especially that we have been importing and are currently importing most of our petroleum products,” he said.

“It is a very critical stage; a costly stage. It will cost us in the region of about US$25 million to do these wells and the chances of success are about 10 percent. Hence, we spent a lot of time being so meticulous about where we must drill or are going to drill,” he said.

Mr MacMillan said during the same event that the Muzarabani-Mbire oil and gas project had large potential as confirmed by international geologists and geophysicists.

“The potential of this project  at the moment is somewhere around 9,2 trillion cubic feet of gas and nearly 300 million barrels of condensate gas…We have potential to make that even bigger when results of the seismic study come.

“1 trillion cubic feet of gas can supply 500 megawatts of power for about 20-25 years. So if this project is successful, it is a potential game changer for the country.

“So we have spent a lot of time and money over the past few years, maturing this project so we can identify the right sites to drill,” he said.

Invictus says its oil and gas project, which transcends the Muzarabani and Mbire districts of Mashonaland Central, is potentially the largest undrilled seismic structure onshore Africa, which speaks volumes about the project’s potential.

Already, Mr MacMillan said over the years the company has signed supply agreements with local firms for the supply of gas to make sure the project can be quickly monetised once a commercial discovery is made.

He also commended the Government for investor friendly policies, which he said had allowed and given the company the confidence to come and invest a lot of money, now estimated at around US$12 million.

“The reforms that have been put in place by the Government have allowed us and given our investors confidence that we can come to Zimbabwe; we can explore  and if we make a discovery, we will have a long term relationship with the country.

“(This) will provide investors a good return, but also the country with a fair share of resources. So we have put in place an agreement with the Government called petroleum exploration development and production agreement (PEDPA).

“That Governments the exploration, production-from the sub-surface of the product if we discover, but we are also working on a production sharing agreement with the Government and that defines the fiscal terms over the life of the project,” said.

In the event of commercial discovery, the Government would get significant tax inflows, royalties and a share of the oil or revenue over a long term relationship that Mr MacMillan said could last for about 40 years.

He said over the last four years, Invictus has signed an agreement with the Government on rules of the investment, conducted an environmental impact assessment, conducted independent studies, reached commercial agreements with off-takers, among some of the key milestones.