Why does not the country benefit yet from the Bemolanga project?
Despite the discovery of the Bemolanga oil sandstone deposit in 1901, its exploitation, whether for hydrocarbon production or for road purposes, has not yet been possible due to several factors. First, such exploitation requires huge investments due to the nature and density of the ore, which has to be extracted by thermal processes. Then, the exploitation of the Bemolanga deposit also requires the use of technology for profitable extraction in the long term. Finally, the oil price fluctuation has led oil companies that successively occupied the block to conclude that the deposit is not economically profitable.
Why oil contracts can only be signed with OMNIS?
According to Article 12 of the Petroleum Code, any “upstream” activity in the national mining domain shall be undertaken only by virtue of the petroleum contract with the National Company. Article 96 states that, until the effective implementation of the national company, the technical body is authorised to act on behalf of the National Company. OMNIS is designated as the technical body responsible for the management of the national Hydrocarbon mining domain.
The oil contract stipulates that OMNIS has the right to terminate the oil contract if the oil company violates the provisions of the petroleum Code/ the oil contract or in case of non-renewal of the hydrocarbon mining title.
Oil contracts provide for the establishment of management committees within which all decisions on the conduct of petroleum operations are taken. OMNIS is therefore represented on the said management committees. Further, oil companies are required to send periodic reports on the progress of their work to OMNIS. The latter has also the right to carry out audits in addition to monitoring and direct controls on the sites where the operations are undertaken.
Is OMNIS entitled to terminate an oil contract that it has concluded with an oil company?
The oil contract stipulates that OMNIS has the right to terminate the oil contract if the oil company violates the provisions of the Petroleum Code/ the oil contract or in case of non-renewal of the Hydrocarbon mining title.
What is the difference between OMNIS and OMH and BCMM?
The “Office des Mines Nationales et des Industries Stratégiques” (OMNIS) operates in the Malagasy upstream petroleum sector and is the technical body in charge of the management of the national Hydrocarbon mining domain. It is placed under the technical supervision of the Ministry of Mines and Strategic Resources.
The “Office Malgache des Hydrocarbures” (OMH) is the body in charge of regulating the activities of the downstream petroleum sector in Madagascar. It is placed under the technical supervision of the Ministry of Energy, Water and Hydrocarbons.
The “Bureau du Cadastre Minier de Madagascar” (BCMM) is the body in charge of managing mining authorisations and permits in Madagascar. It is placed under the technical supervision of the Ministry of Mines and Strategic Resources.
Why are not petroleum operations directly undertaken by OMNIS instead of oil companies?
The Petroleum Code authorises OMNIS, in its role as a national company, to carry out petroleum operations by itself or in association with other oil companies OMNIS, as the Malagasy State representative, does not, however, have the necessary funds to undertake these operations. By way of illustration, petroleum exploration operations can cost from 35 million to 100 million US dollars at least. Petroleum operations also require specific and expensive technical means and tools. Therefore, petroleum operations require huge investments that OMNIS does not have.
Why do not the pump prices decrease while the Tsimiroro project has entered the exploitation period since 2015?
Indeed, Madagascar Oil S.A (MOSA) has entered the exploitation period since 2015 however, the company is still in the development phase, that is the phase during which MOSA prepares, builds and implements the hydrocarbon production facilities. The production phase itself begins after this phase.
Further, as Madagascar does not have any refinery company, obtaining petroleum products for vehicles from Tsimiroro’s heavy oil remains complex.
How is production sharing done between OMNIS and oil companies?
The sharing of production is stated in the oil contract. The profit oil is shared between the Malagasy State and the oil company. It should be noted that profit oil is the share of hydrocarbons accruing to the Malagasy State and the oil company, deducted by the quantity of Hydrocarbons used to recover cost oil and to pay royalties. Also, the sharing rate is negotiable.
What are the impacts of the Covid-19 health crisis on the oil industry?
In general, the drop in oil demand, mainly from China, has led oil companies and oil and gas service companies to reduce their investments and decide to postpone certain projects. Among the impacts, which are different for each player, we can mention:
- For the majors, a drop of 100 billion US dollars in upstream oil investments is expected*. These companies were then forced to downsize.
- For small and medium-sized independent companies, several have decided to postpone their projects while others have gone bankrupt.
- For national companies and some States, several bid rounds initially planned for the year 2020 for the award of exploration licences have been cancelled.
- For oil and gas services companies, bankruptcies, consolidations and integrations operations have been noted.
This health crisis has also accelerated the oil industry’s awareness of the need to diversify oil companies’ activities and has stepped up discussions on the energy transition.
Could petroleum activities and environmental protection coexist?
Petroleum activities can effectively coexist with environmental protection. Environmental protection is at the heart of international oil companies’ strategies which continuously aim to improve their environmental performance in undertaking their activities. Besides, new technologies and approaches are continually developed by the oil industry to reduce the environmental impacts of petroleum activities. In Madagascar, all oil companies must comply with legal and regulatory provisions on environmental protection throughout the project life. An environmental permit is required before the start of petroleum activities and an Environmental Impact Assessment is carried out prior to any petroleum activity. Also, an environmental audit is performed before the completion of oil activities to obtain environmental discharge. To ensure site rehabilitation and/or environmental restoration, oil companies must set up a demobilisation fund during the production phase. Contingency plans are in place to deal with accidents or emergencies.