 HYDROCARBONS DIVISION PROJECT |
Ackram Mohajy Andriamandaminy
Managing Director of OMNIS
BP 1 bis, Antananarivo, Madagascar
Phone: +261 20 22 242 83
Fax: +261 20 22 229 85
E-mail: omnis@simicro.mg or omnisdea@dts.mg
OMNIS, a state-owned agency, was created in 1976 to administer the development and security of the natural resources essential for the country's industrialization.
With its main objectives the development and promotion of exploration for oil & mineral resources, OMNIS is seeking to internationalise its activities in close co-operation with international oil and mining companies, through:
- creating a stimulating and competitive environment
- systematically reviewing and updating exploration data to allow easy and reliable prospect appraisal.
Through the Hydrocarbons Division, OMNIS is the recipient of all exploration data in Madagascar, geophysical survey data, geological studies, well drilling and completion reports, cores & drill stem data. All new data are integrated into the database, and when necessary re-integrated into a consistent regional and local format.
OMNIS also undertakes geological mapping projects, and limited geophysical surveys particularly gravity and pround magnetics.
OMNIS employs 400 workers, one third being highly qualified technical staff with wide experience in all activities related to economic, financial, technical, petroleum, mining and industrial operations. The managements team is of international standing with many years of international experience.
| EXPLORATION HISTORY |
The two giant exhumed oil fields, Bemolanga and Tsimiroro have created interest in Madagascar throughout the 20th century. There have been four main periods of exploration activity.
1901-39 Drilling of 23 shallow wells in Bemolanga and Tsimiroro areas
1945-65 Société de Pétroles de Madagascar (SPM) began a more systematic exploration of Madagascar, using surface mapping reconnaissance gravity and magnetometer surveys, SPM drilled 39 wells on these criteria.
1955 Significant gas shows in Sikily 1 well in Morondava Basin by SPM.
1965-75 Multinational companies (Chevron, Agip, Conoco, Temeco) entered in exploration. Digital seismic is introduced in 1968 and 16 on 17 wells drilled had oil & gas shows
1971 Significant gas shows both in Mariarano and Mahajamba Agip wells, in the Majunga Basin
1976 Establishment of OMNIS. Seismic surveys and geological studies in Morondava Basin.
1976-93 Acquisition of seismic data and drilling of 15 wells by Agip, Amoco, BHP, Maxus, Mobil, Oxy-Unicoal, Shell, OMNIS-PCIAC
1987 Gas discovery in OMNIS PCIAC well W-Manambolo 1 in Morondava Basin, 260,834 mù3/day
1991 Oil discovery (41° API) in shell Manandazar 1 well in Morondava Basin
1996 Petroleum law ratified prompting negotiations
Since 1997- 6 Petroleum companies have been operating: Gulfstream Ressources Ltd. - Triton Energy Inc. - Hunt Oil Company L.L.C. - Xpronet Inc. - Vanco Energy Ltd. - Anadarko Petroleum Co.
| PROMOTION OF THE OIL EXPLORATION |
Promotional rounds have been undertaken since 1980 by OMNIS and have been conducted jointly by OMNIS and international petroleum consultants. They have resulted in the intervention of different oil intervention companies for oil exploration:
Prior to 1995, many companies were active in Madgascar: Mobil, Occidental Petroleum-Unicoal, AGIP, AMOCO, BHP and MAXUS under Joint Venture Agreements, and SHELL under Risk Services Contract.
Notable hydrocarbon shows were encountered during this period. The most important were the gas and 41° API oil of the Manambolo wells respectively within the Senonian and Albo Cenomanian levels and 41° API oil of the Manandaza wells in the Karroo Corridor.
Both localities are in the Morondava Basin. Even in the Majunga basin, oil shows are encountered in Cenomanian level of Marovoay-1 well.
After 1995, the oil companies which are operating in Madagascar are:
- Gulfstream Ressources Ltd. Signed on June 04th, 1997, for two 8 years Joint Venture contracts. The offshore Antonibe block (5,220 sq km) in Majunga basin and the onshore Tsiribihina block (26,700sqkm) in Morondava basin. Gulfstream is being acquired by Anadarko Petroleum Co. and American Company based in Houston, it would be OMNIS partner.
- Triton Energy Inc. a subsidiary of Amerada Hess Co, and American company two 8 years production sharing contracts related to the offshore Ambilobe basin and the offshore Cap Sainte Marie block. Triton relinquished 37% of the offshore Amilobe block after the seismic acquisition and the Cap Sainte Marie block due to financial problem on October 30th, 1998. Now, Triton is operating in the offshore Ambilobe block (17,00sq Km), and received one year extension of the exploration phase II to November, 1st, 2002 before entering the drilling phase.
- Hunt Oil Company L.L.C. signed 3 eight-year production sharing contracts: Majunga and Tsimiroro blocks on October 15th 1997, and the last one on December 2nd, 1998. Hunt relinquished Majunga block after the drilling of the wildcat Belobaka 1 which provided minor oil and gas shows. Hunt has unitised Tsimiroro and Bemolanga blocks into Tsimi-light block (11,500 sq km) on October 23rd, 2001.
- Fusion of several American oil companies, Xpronet signed on December 5th, 2000, 2 eight years production sharing contracts related to offshore deep water Rivomena block (77,500 sq km) and offshore deep water Mavony block (64,500 sq km) both in the Mozambique channel adjacent to Morondava basin. According to the contract Xpronet is gathering and interpreting all available data on the blocks.
- Vanco Energy Company Ltd. signed one eight years production sharing contract corresponding to the deep water Majunga basin (14,866 sq km). Vanco is starting the exploration phase II work commitment although it is in the exploration phase I.
| STATUS OF MADAGASCAR OIL EXPLORATION |
Oil exploration was based in the first half of the century on potential geophysics and analogical seismic. Since 1965, multinational oil companies have been in Madagascar, they are using updated techniques.
The exploration data available in Madgascar is summarized as follows:
- geophysical surveys:
72,846 km of 2D seismic
195,346 km of airmag
10, 808 km of micromag
32,770 km of magnetism
87,116 km of gravity
- Exploration wells: 75 wells were drilled for oil purpose in Madagascar
01 in onshore Ambilobe basin
08 in Majunga basin (02 offshore & 06 onshore)
65 in Morondava basin (06 offshore & 59 onshore)
01 in offshore East Coast
Among the 75 wells, 53 have oil & gas shows.
The most important light oil shows, 41° API, were encountered in Morondava basin, Manambolo-1 and Manandaza-1 wells respectively in Albo-Cenomanian and Upper Permian, in Majunga basin, Marovoay-1 in Cenomanian and in East Coast Basin, in the Miocene level of MAL-1 well.
Gas shows are found both in Majunga and Morondava basins, the most significative are:
- For Majunga basin in the Tertiary of Mariarano-1 in offshore well
- For the Morondava basin in the Senonian West Manambolo-1 and Upper Jurassic of Sikily-1 both onshore wells and in Eponge -1 an offshore well.
Based on the re-interpretation an re-evaluation of the available data, we want to point out that more than two thirds of the wells were drilled out of structures and only 11 wells presented combination of reservoirs, seals and traps.
In addition, the density of the wells drilled in the sedimentary basin is about 01 well per 4,000sq km.
According to this density, of the works and the way that they have been undertaken, we estimate that the sedimentary basins of Madgascar are still under-explored and remain so prospective for oil exploration.
| FISCAL AND LEGAL FRAMEWORK FOR PETROLEUM INVESTMENTS |
To improve terms and create favourable conditions to encourage foreign investment, a new Petroleum Code was issued in 1996. Exploration acreage is available in all sedimentary basins, both onshore and offshore.
In Madagascar, E&P operations are regulated by the Petroleum Code. This provides for Production Sharing and Joint Venture Contracts, but other contractual forms will be permitted at the investors' option. The following fiscal regime provides for the following.
Royalties (Sliding scale base)
Wellhead Crude Oil Royalty (Expensable) Wellhead Natural Gas Royalty (Expensable)
Production Tranche (b/d) Royalty Rate Production Tranche (mm cu m/d) Royalty Rate
0-25,000 8% 0-12 5.0%
25,000- 50,000 10% 12-24 7.5%
50,000- 75,000 12% Over 24 10.0%
75,000-100,000 14%
100,000-130,000 17%
Over 130,000 20%
| INCOME TAX |
Flat rate of 35% exploration expenditures are immediately (100%) expensed, and development expenditures (including interest expense) are depreciated over four years using the straight line method. Unlimited carry forward of exploration expenditures is allowed, and of development costs up to a seven-year limit.
| FISCAL TREATMENT OF DIFFERENT CONTRACTS |
 Production sharing contract |
Royalty and income Tax are payable as explained above. Recoverable expenditures are recoverable from a Cost Oil maximum of 65% of Available Production (Total Production less losses and Royalty). The balance of Recovery (35% plus ay unused Cost Oil) is shared between the company and National Oil Company (NOC) in accordance with a sliding scale calculated according to an "R" factor. "R" is basically the company's cumulative un-depreciated and undiscounted expenditures under the contract. The values of "R" and the production sharing ratios are negotiated on a contract-by-contract basis.
| Joint Venture Contract |
The NOC participates in the JVC, with its percentage of participating interest set by negotiation. Participation of the NOC carried by the foreign partner during the exploration phase, with full reimbursement of this carry in the success case (in instalments not to exceed 50% of the NOC's share of production). Royalty and Income Tax are payable as detailed above.
A limit local market supply obligation is in force. Operations are exempt from custom duties. The right to retain proceeds of petroleum sales offshore and to operate foreign currency bank account is guaranteed. Minimum exploration work obligation are to be supported by a bank guarantee.
| ENVIRONMENTAL IMPACT ASSESMENT (EIA) |
EIA is mandatory and before commencing any oil exploration operation in the contract area, the contractor shall carry out and submit an EIA in accordance with the following principal legislative instruments relating to the EIA in Madagascar:
- Law N° 90-033 from December 1990 which is Madagascar environmental Charter
- Decree N° 99-954 from December 1999 (MECIE), addressing the application of an EIA with regards to the compatibility of investments and the environment
- Order N°4355 from 1997 specifying and defining the "sensitive zones" referred to the Decree MECIE
- Law addressing the policy for the Management and control of Industrial Pollution enacted in October 1999
- Territorial Waters legislation
These legislative documents are re-enforced by protocol known as the " General directive" for EIAs and specific guidelines for the prospection and exploration of oil and gas in Madagascar.
| TECHNICAL DATA AVAILABILITY |
OMNIS is equipped with data centre and sample storage related to petroleum exploration activities. These facilities are open for consultation subject to token fees. Data are also available for sale. On behalf of OMNIS, Alconsult International Ltd. based in Calgary (Canada) keeps a set of reports on Madagascar potential (1997); so does Geophysical Exploration Technology (GETECH) C/O Earth Science, University of Leeds in UK which stores all potential geophysical data of the sedimentary basin of Madagascar. These data are for sale. |
The Office for National Mining & Strategic Industries is pleased to announce exciting opportunities for oil exploration in Madagascar.
Madagascar comprises five basins totalling 320,000 sq km (123,55sw miles). The three most important, Ambilobe, Majunga and Morondava, occupy the west coast and share a common geological history, initiated as intra-cratonic rifts during Permian, they contain thick sequences of continental classic sediments.
Subsequent rifting and southward drifting of Madagascar away from Africa created a passive margin along the west coast.
Continued subsidence and tilting to the west, in response to the rifting of India during the Late Cretaceous, has led to a thickly developed Mesozoic and Cenozoic sequences in each basin.
The remaining two basins are smaller and poorly understood. The cap Ste Marie Basin on the south coast may have Permian and Mesozoic fill underlying the Neogene cover, although this is unproven. Similarly, the Ile Ste Marie Basin at the northern end of the east coast, may have a Mesozoic section beneath the possible volcanics drilled in the only well, Il e Ste Marie-1 (MAL-1).
| HYDROCARBON POTENTIAL |
Most of the exploration efforts in Madagascar have been concentrated in the three main sedimentary basins, Ambilobe, Majunga & Morondava.
The two giant exhumed oil field would be sourced by the Lower Permian wide spread in East Africa. Newly discovered Liassic Middle Jurassic and Neocomian source rocks provide additional potential for the Jurassic and Cretaceous.
Exploration plays and main tectonical events are linked. The failed rift related traps are constituted by Permo-Trias tilted blocks and flower structures which are syndrift events.
The passive margin contains synsedimentary traps (roll-over anticline), flower structures, stratigraphical traps.
Cretaceous shelf edge and associated fan systems can also be mapped, and well result demonstrate that light oil has migrated into structures formed by the submarine fans. Salt tectonics are inferred in Ambilobe & Majunga Basins. The deep offshore now provide new exploration play concepts.
| EXPLORATION PLAYS |
| Related Failed Rift Play Locations |
· Ankara Graben
· Karroo Corridor
· Berenty/ Vohidolo Troughs
| Related Passive Margin Plays Locations |
· Western Morondava Basin
· Majunga Basin
· Ambilobe Basin
| RELATED FAILED RIFT PLAYS |
| Permian Tilted Fault BlocksPotential |
Oil-Gas Heavy Oil - TarSources & Seals: Sakoa Coals/ Shales (Late Permian)- Middle Sakamena Shales (Early Trias)Maturity: Late Jurassic/ late CretaceousReservoirs: Lower Sakemena (Late Permian)Trapping: Extensional Faulting (Late Permian)Blocks: 1101- 2101- 2103- 2104- 3102- 3104- 3107- 3109- 3111- 3113
| Drape AnticlinesPotential |
Oil- Gas- Heavy Oil - TarSources & Seals: Intra Isalo Shales (Middle Trias -Late Lias) Middle Sakamena ShalesMaturity: Late Cretaceous/Early Tertiary & Late Jurassic/ Early cretaceousReservoirs: Isalo Sandstones (Middle Trias- Late Lias)Trapping: Related to early Jurassic riftingBlocks: 1101- 2101- 2103- 2104- 3102- 3104- 3107- 3109- 3111- 3113
| Roll Over AnticlinesPotential |
Oil- GasSources & Seals: Sakoa Coals/ Shales Middle Sakamena ShalesMaturity: Late Jurassic/Late CretaceousReservoirs: Lower SakamenaTrapping: Extensional Faulting (Late Permian)Blocks: 1101- 2101- 2103- 2104- 3102- 3104- 3107- 3109- 3111- 3113
| Flower StructuresPotential |
Oil- Gas- Heavy Oil- TarSources & Seals: Intra Isalo Shales (Middle Trias- Late Lias) Middle Sakamena ShalesMaturity: Respectively Late Cretaceous/ early Tertiary & late Jurassic/early CretaceousReservoirs: Low Sakamena Trapping: Related to early Jur
| RELATED PASSIVE MARGIN PLAYS |
| Toarcian Tilted Fault BlocksPotential |
Oil- GasSources: Intra Isalo- Middle Sakamena- Andafia/ Beronono (Late Toarcian) Middle Jurassic Condensed SeriesMaturity: Late Jurassic/ early CretaceousReservoirs: IsaloTrappings: Related to early Jurassic riftingBlocks: 1101- 2101- 2102- 2103- 3104- 3107- 3109- 3111- 3113
| Flower Structures Potential |
Oil- GasSources: Intra Isalo -Andafia/ Beronono- Middle Jurassic condensed seriesMaturity: Late Cretaceous / Early TertiaryReservoirs: Bemaraha Limestones / SandstonesTrappings: Related to southeastward driftingBlocks: 2001- 2002- 2102- 2103- 3001- 3002- 3003- 3101- 3103- 3105- 3106- 3108- 3110- 3112
| Tertiary Faulted BlocksPotential |
Gas & CondensateSources: Andafia/ Beronono Middle Jurassic condensed seriesSeals: Intra-Cretaceous & Tertiary ShalesMaturity: Late Cretaceous/ Early TertiaryReservoirs: Cretaceous sands & Eocene LimestoneTrappings: Related to Late Tertiary Gravitational CollapsesBlocks: 2101- 2102
| Jurassic / Cretaceous Roll over AnticlinesPotential |
Gas - CondensateSources: Intra Isalo- Andafia/Beronono middle Jurassic condensed seriesMaturity: Late Cretaceous/ Early TertiarySeals: Duvalia Marls (Malm- Neocomian)Reservoirs: Jurassic/Cretaceous sandstonesTrappings: related to souhteastward driftingBlocks: 2001- 2002- 2101- 2102- 2103- 3001- 3002- 3003- 3101- 3103- 3105- 3106- 3110- 3112
| Stratigraphic TrapsPotential |
Oil- Gas- CondensateSources: Andafia/ Beronono - Condensed series- Malm/ Neocomian ShalesMaturity: Late Cretaceous/ early tertiary -Albian/MioceneSeals: Duvalia MarlsReservoirs: Cretaceous sandstonesTrappings: Lowstand wedges- deep sea FansBlocks: 2101- 2102- 2103- 3102- 3103- 3105- 3106- 3108
| Salt Drapirs |
Ambilobe & Majunga Offshore Basins
Read in French
| ATOMIC ENERGY DIVISION-OPERATIONAL DEPARTEMENT OF THE OMNIS IN THE MINING SECTOR |
| ILMENITE PROJECT |
| HISTORY |
Since the 1950's, Madagascar has assessed the potential of its mineral resources, especially in the Fort Dauphin region. However, only in 1986 has a first step taken place with the signature of a joint venture between l'Office des Mines Nationales et des Industries Strategiques, QIT-Fer, and Titane Inc (QIT). QIT-Fer and Titane Inc are subsidiaries of Rio Tinto (previously RTZ plc) one of the biggest mining companies in the world.
The exploration phase ended in 1989, the studies showed that the reserves were 60 million metric tons of minerals (ilmenite, rutile, zircon). The exploitation could supply 10% of the worlds needs in dioxide of Titanium for the next 40 years.
The start of the production has been delayed many times. The dimensions and complexity of the project can explain those delays. It will be the most expensive industrial investment ever realized in Madagascar: at the basic investment level and the infrastructure level.
The international finance lenders require the creation of a company with a strong morale personality. The lenders also require the company to be created with strong fiscal, judicial, and financial standards. Those standards must as close as the standards used internationally.
The convention between OMNIS and QUIT-Fer/Titane was signed in February 1998, it replaced the joint-venture. The convention established the length of the projects, the fiscal contract was establish at 25 years, the same for the rights and obligations of the 2 partners.
A firm was created, QUI MADAGASCAR MINERALS S.A. This company was created to be the project leader, QIT-Fer/Titane owns 80% of the capital and OMNIS 20%.
| THE EXPLOITATION TECHNIQUES |
The project will be established on 3 sites in the Fort Dauphin region: Mandena, Ste Luce, and Petriky. The main mineral extracted will be Ilmenite and the two others: Rutile and Zircon.
Ilmenite and Rutile are ingredients used in creating white pigments with a base of Dioxide Titanium. The white pigment is mainly used in the painting, plastic, textile, and paper industries. A small part (less that 5%) of the mineral will be transformed in metal titanium, used in the aerospace industry.
The exploitation will use the technique of continuous scraping; a scraper and a separation plant extract the mineral out of artificial ponds. Those ponds will be designed according to strict mining plans. This mining technique has the advantage of disrupting only a small area. The area will be rehabilitated as the project moves to newer ponds. Once the mineral mix has been extracted out the pond, it is directed to a fixed plant that will separate the various minerals: ilemenite, rutile, zircon.
The exploitation will start in the Mandena area, the estimated production level will be 750 000 metric tons of ilemenite and 25 000 metric tons of Zircon.
After receiving the environmental permit, studies were ordered to establish the engineering constraint and the financial feasibility. The studies were the final step to decide the level of investment.
| MINING WILL DEVELOP THE REGIONS |
The exploitation of the mining area will benefit the surrounding local and national area in the medium and long term.
This project intends to protect and conserve the mining area to its best ability.
The project will develop the infrastructure (roads, bridges, and harbors) for the mining needs and for the regional economical needs.
With the development of the infrastructure current products (wood, lobsters etc) will find possibilities in being exported. Other mining projects will see viable financial solution to exploiting new resources. The new infrastructure will lower the cost of goods imported from the main towns, and will create jobs.
The project will tie its development with the tourism industry in the region. QUI MADAGASCAR MINERALS S.A. intends to develop various project dedicated to enhancing the area and thus developing tourism in the Fort Dauphin region.
| AN ENVIRONMENTALLY FRIENDLY PROJECT |
The project gives social and environmental aspect a primordial place its development
An impact study on the environment began in 1989. The study was divided into 6 areas of expertise: fauna, flora, aquatic ecology, grounds, hydrology, and socio-economics. An additional study on the natural state of the area was drafted in 1993.
After the signature of the convention establishing the project, additional social and environmental studies were drafted from 1999 to 2001. Those additional studies allowed to finalize the social and environmental study (EISE). That study was given to the Malagasy government in mai 2001 for evaluation. The study was evaluated by national organisms, international organisms, various ministries, experts, and the public directly and indirectly affected by the project.
After the evaluation process, designed to reassure of the feasibility of the project, the environmental permit was given in November 2001. Additionally an environmental managing plan (PGEP) was drafted for the care of the project company.
The PGEP has for objectives to define the surveillance activities, the compensation for the impact of the project on the social and natural level.
The compensation study plans to rehabilitate the site to the best of the companies ability. In addition to rehabilitation other environmental projects are mandated: stabling conservation zones, restoring the wetlands, restoring the coastal forest, and replanting the scraped area with fast growing trees. |
