Malawi Government has awarded a new offshore petroleum prospecting licence to a South African investor—Sacoil Holdings Limited, both the company and Mines Minister John Bande confirmed the development.

In a statement, SacOil, says it has been awarded a 100 percent equity interest and operator status of Block 1.

“SacOil, the African independent upstream oil and gas company, is pleased to announce the award of 100 percent equity interest and operator status Block 1, an offshore petroleum prospecting licence in Malawi.

“Following the due process and intensive negotiations between SacOil and the Malawi Government, the prospecting licence was awarded to SacOil on 12 December, 2012,” reads the statement in part.

It says Block I is located in the north western part of Malawi bordering Tanzania to the north and Zambia to the west.

SacOil says at 12,265 square km, Block 1 is the second largest petroleum exploration licence demarcated in the country.

“The licence is located on trend with the East African rift system which is a proven exploration province with prolific oil discoveries in Sudan, Chad, Kenya and Uganda. It is anticipated that the same tertiary rift system will be present in Malawi,” SacOil says.

The licence is divided into an initial four year period followed by two subsequent three year renew periods, according to SacOil.

The company says it hopes that it will during the initial four-year period carry desktop studies and the acquisition of gravity and magnetic data in order to evaluate the petroleum potential of the block.

It also intends to invest US$2 million (about K660 million) in the initial four years.

Reacting to the award of the licence, SacOil Chief Executive Officer Robin Vela is quoted as saying: “We are delighted at the award of the licence; it [presents our firm commitment to grow our asset base on the African continent and drive shareholder value. This is in line with SacOil’s strategy of building and developing a uniquely African portfolio. In addition, it gives effect to our drive to unlock under-explored regions in Africa,” he said.

Commenting on the licence, Bande said yesterday Malawi Government’s expectation is that the company will start doing its exploration activities immediately.

He said the ministry will also ensure that the interests of Malawians are protected as the company carries out its activities.

“Meanwhile, we are going to review all oil prospecting licences so that people should not hold licences for speculative purposes,” Bande said.

In a related development, he said his ministry will conduct airborne geomapping in the first quarter of next year to update its data base on the sites of minerals in the country.

Bande also said the ministry is in the process of drafting the Mines and Minerals Act and Policy to, among other things, end community protests against mining investors.

The government already granted Surestream Petroleum Limited, a UK-based oil exploration company, a licence to explore oil in Lake Malawi.

Out of six blocks for oil prospecting available in Malawi, Surestream was awarded two blocks, Block 2 and 3, while the other two blocks, 4 and 5, were awarded to Simkara company.

But the government later revoked Samkara’s prospecting licence after it emerged that the company does not have any oil drilling experience. With the award of Block 1 to SacOil, which also operates in DRC, it means that there are three more blocks, 4, 5 and 6, which are still up for grabs.

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