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OIL EXPLORATION OPPORTUNITIES

MADAGASCAR. OIL EXPLORATION OPPORTUNITIES. OMNIS2005. 1. MADAGASCAR. MALAGASY REPUBLIC. Third largest Island in the World Southwest of Indian Ocean 400 km off the coast of east Africa Length:.......1600 km Wide:..........600 km Surface:......520 000sq.km2 Climate : 2 seasons

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OIL EXPLORATION OPPORTUNITIES

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  1. MADAGASCAR OIL EXPLORATION OPPORTUNITIES OMNIS2005. 1

  2. MADAGASCAR MALAGASY REPUBLIC • Third largest Island in the World • Southwest of Indian Ocean • 400 km off the coast of east Africa • Length:.......1600 km • Wide:..........600 km • Surface:......520 000sq.km2 • Climate: 2 seasons • Dry from April to September • Wet & Warm from to October to March OMNIS2005. 2

  3. MADAGASCAR • Capital: Antananarivo • Population: 18 millions • Languages Malagasy and French • Administrative Division 6 Provinces subdivided in 22 Regions OMNIS2005. 3

  4. MADAGASCAR • CONSTITUTIONAL CHARTS • Executive • President of the Republic, Chief of State • Government: Prime Minister, and Ministries • Legislative • National Assembly:Deputies elected at universal suffrage • Senate: Senators , 1/3 designated by the President of the Republic and 2/3 elected by the big electors. OMNIS2005. 4

  5. MADAGASCAR • Judiciaries • Supreme Court • High Court of Justice • High Constitutional Court OMNIS2005. 5

  6. MADAGASCAR • Infrastructure Roads: 49 827 km Railways: 963 km Port: 3 internationals; 8 secondaries and 6 for the coasting navigation Air-port: 116 with 4 internationals • Communications and Informations Modern networks (phones, email, fax) Private Companies management OMNIS2005. 6

  7. MADAGASCAR • Economy of market: Export of agricultural and textile products Import of furniture and equipment for the industries • Tourism: New destination for the tourists Ecological Tourism (protected fauna and flora) OMNIS2005. 7

  8. MADAGASCAR • Energy Electricity generated by the hydro-electrical or thermal station Firewood and charcoal for domestic use Oil and Gas Needs to import refined products Consumption of oil: 15,000bbl/day Refinery’s capacity: 740,000m3 of crude oil/year OMNIS2005. 8

  9. MADAGASCAR • Regulation of Oil Industry under the Ministry of Energy and Mines and functions of Government • Upstream sector management by Office des Mines Nationales et des Industries Stratégiques (OMNIS) • Downstream sector management by Office Malgache des Hydrocarbures ( OMH ) OMNIS2005. 9

  10. MADAGASCAR General Managing Mining Division Societies Hydro-carbons Financial Logistics New ventures Exploration Data Center OFFICE FOR NATIONAL MINING AND STRATEGIC INDUSTRIES • OMNIS • InAntananarivo • Creation in 1976 • State-owned agency managing in petroleum and mining development • 350 employees • 1/3 highly qualified • Management team with many years of international experience Human resources OMNIS2005. 10

  11. MADAGASCAR ROLE OF OMNIS • Tasks: • Assess and develop petroleum resources • Promote private sector investment in petroleum exploration and production • Monitor oil companies activities • Holder of all oil exploration data • Undertake their own projects (maps) OMNIS2005. 11

  12. MADAGASCAR OMNIS2005. 12

  13. MADAGASCAR PETROLEUM EXPLORATION • 320 000 sq km (123,550 sq miles) of ON & OFFSHORE dividedinfive,suchas : • THREE mainsedimentary basins : • AMBILOBE • MAJUNGA • MORONDAVA • TWO other smaller basins : • CAP STE MARIE in SOUTH • ILE STE MARIE in EAST COAST OMNIS2005. 13

  14. MADAGASCAR PETROLEUM EXPLORATION (cont’d) • Efforts concentrated in these three basins due to the existence of two giant exhumed oil fields in the northern part of Morondava basin • For the three main basins: • common geological history related to rifting & drifting of Madagascar from Africa & India • The last two basins, smaller than these three, still unexplored OMNIS2005. 14

  15. MADAGASCAR PETROLEUM POTENTIAL • Source rocks distributed from Paleozoic to Mesozoic • Each tectono-sedimentary event corresponds to good reservoir rocks • Reservoirs sealed by interbedded shale and limestone OMNIS2005. 15

  16. MADAGASCAR • PETROLEUM POTENTIAL (cont’d) • Both structural and stratigraphical trappings can be encountered in each tectono-sedimentary sequence • Hydrocarbon shows, tar sand and heavy oil accumulations attest hydrocarbon generation • Geochemistry and basin modeling suggest the time of maturation and the oil migration history OMNIS2005. 16

  17. MADAGASCAR STATUS OF OIL EXPLORATION Geophysical surveys . 71,000 km of 2D seismic . 3,600 km² of 3D seismic . 195,000 km of aeromag . 11,000 km of micromag . 33,000 km of magnetism . 87,000 km of gravity OMNIS2005. 17

  18. MADAGASCAR • STATUS OF OIL EXPLORATION • (cont’d) • Exploration wells : 75 wells • 1 in onshore Ambilobe Basin • 8 in Majunga Basin (2 offshore & 6 onshore) • 65 in Morondava Basin (6 offshore & 59 onshore) • 1 in offshore East Coast OMNIS2005. 18

  19. MADAGASCAR STATUS OF OIL EXPLORATION (cont’d) • Some shows: • For oil: • 4 wells :Mnbl-1; Mdz-1: 41°API(Morondava basin) ; MRV-1 (Majunga basin) & MAL-1 (East Coast basin) • For gas: • 1 well in Majunga Basin ( Vanco permit, Mar-1) • 4 wells in Morondava Basin ( Va-1; Ep-1; WMnbl-1 & SK-1) OMNIS2005. 19

  20. MADAGASCAR CURRENT STATUS OF EXPLORATION ACTIVITIES Four Companies operating in Madagascar (10 Contracts) • VANCO Group (Vanco – ExxonMobil – Hydro) in Majunga offshore deep water, 1 PSC • Madagascar Oil Sarl (MOS), an affiliate of Vuna Energy, 6 PSCs in onshore OMNIS2005. 20

  21. MADAGASCAR CURRENT STATUS OF EXPLORATION ACTIVITIES (cont’d) • Sterling Energy Ltd in Ambilobe and Ampasindava offshore,2 PSC • ExxonMobil in Cap Saint Andre offshore, 1 PSC • TGS-Nopec in Speculative Survey in west and south offshore of Madagascar OMNIS2005. 21

  22. MADAGASCAR Current Promotion • Malagasy basins divided in blocks : Off and On-Shore • Promote West & South Off-Shore (in Spec. Survey) divided in blocks for a maximum size 1900 square km for each block • General petroleum interests for this promoted offshore (speculative survey will be started in August ) OMNIS2005. 22

  23. MADAGASCAR LEGAL AND CONTRACTUAL FRAMEWORK OMNIS2005. 23

  24. MADAGASCAR • Hydrocarbon upstream activities is governed by petroleum law • OMNIS representative of the state and admnistrator of the National Mining Domain of Hydrocarbons • “Societe nationale” in charge of all petroleum activities • OMNIS entitled to act on behalf of the “Societe nationale” until its creation OMNIS2005. 24

  25. MADAGASCAR • CONTRACT TYPES • Any type of petroleum contracts may be applied • But two alternatives specially forseen: • Production Sharing Contract (PSC) • Joint Venture Contract (JVC) OMNIS2005. 25

  26. MADAGASCAR • Production Sharing Contract • Mining Titles granted to OMNIS • Company responsible for all petroleum costs • Cost recovery  65% of available production ( total production – royalty) • Profit Oil (available production – petroleum cost) shared between OMNIS and Oil Company according to sliding scale based on r factor • r = x/y • x = company’s cumulative gross revenue • y = company’s cumulative gross expenditure • Another formula could be adopted OMNIS2005. 26

  27. MADAGASCAR • Joint Venture Contract • Mining Title held jointly by OMNIS and the contractor company • Percentage of participating interest set by negociation • Company responsible for all petroleum costs • Recovery cost set by negociation OMNIS2005. 27

  28. MADAGASCAR • MINING TITLES • Grant by the President of Republic • Three separate Mining Titles: • Exploration Mining Title: 8 years with 2 years extentions • Exploitation Mining Title: • . Oil 25 years • . Gas 35 years • 5 years extentions • Transportation Mining Title: • . Oil 25 years • . Gas 35 years OMNIS2005. 28

  29. MADAGASCAR • FINANCIAL DISPOSITIONS • Exploration Period: • Work Program subject to a bank guarantee • Local needs shall be covered by foreign currency • Exploitation Period: • Proceeds of petroleum’s sales may be retained abroad OMNIS2005.29

  30. MADAGASCAR • FISCAL TERMS • Royalty (sliding scale principle) • Direct tax on hydrocarbon (income tax): • rate:30% OMNIS2005. 30

  31. MADAGASCAR Royalties Oil Production tranche (Bl/d)Rate Q  25000 8% 25000 <Q  50000 10% 50000 <Q  75000 12% 75000 <Q 100000 14% 100000<Q 130000 17% Q >130000 20% Gas Production tranche (MCu.M/D) Rate Q 12000 5.0% 12000 <Q  24000 7.5% Q > 24000 10.0% OMNIS2005. 31

  32. MADAGASCAR • Custom Duties: • Exploration Period: • Regime of temporary tax and customs exemption for material and equipment used in petroleum operations • Exploitation Period: • Duty free for all material and equipment used in development operations and the first installation exploitation units OMNIS2005. 32

  33. MADAGASCAR • Environmental Protection • Company shall : • comply with Environmental provisions stipulated in the Environmental Chart, and • undertake Environmental Impact Study OMNIS2005. 33

  34. MADAGASCAR • Legislation and Jurisdiction • All activities related to hydrocarbons are governed by malagasy law • Arbitration • Pursuant to rules of the International Center for Settlement of Investment Dispute (ICSID) OMNIS2005. 34

  35. MADAGASCAR • Contractual Terms • Work Program: • Minimum Exploration Work Obligations and Expenditure established by negociation with reference to: • Length of exploration periods • Prospectivity and size of acreage OMNIS2005. 35

  36. MADAGASCAR • Admnistration Fees • during Exploration Period us$..…../km2/year according to each phase • Bonus of Production • set by negociation OMNIS2005. 36

  37. MADAGASCAR CONCLUSION AND CHALLENGES • Numerous play concepts in : • Majunga Basin : shallow and deep off & onshore basin • Morondava Basin : passive margin - shallowkarroo • Cap Sainte Marie : shallow & deep offshore • East Coast Basin : shallow & deep offshore • Amending the Petroleum Law • Exploration data for consultation and / or for sale OMNIS2005. 37

  38. MADAGASCAR THANK YOU OMNIS2005. 38

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