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    A ray of hope for Zimbabwe [NGW Magazine]

Summary

Large quantities of coalbed methane beneath an impoverished region of Zimbabwe could transform the country’s economics, as the geology can be prolific. [NGW Magazine Volume 4, Issue 21]

by: Thulani Mpofu

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Featured Articles, Africa, Premium, NGW Magazine Articles, Volume 4, Issue 21, Exploration & Production, CBM, Zimbabwe

A ray of hope for Zimbabwe [NGW Magazine]

Mzarabani, an impoverished district in northern Zimbabwe is more commonly known for its proneness to flooding given its flat, low-lying nature and situation on the southern bank of the Zambezi River. 

It is inhospitably hot and malarial and the biggest economic activity in the area is cotton production -- a hardy crop adapted to aridity.

However, the district will, potentially, soon be better known for something else that is bigger and economically transformative if work by a co-venture led by an Australia Stock Exchange-listed natural gas exploration and development company, Invictus Energy, leads to a commercial natural gas discovery.

“We have progressed very quickly over the last 15 months and we are very proud of our work we and our partners and stakeholders have undertaken to mature the project in that time,” said Scott Macmillan, Invictus founder and managing director in an emailed response to questions from NGW.

“Gas to liquids (GTL) is also a potential solution to provide refined products to the domestic market which consumes 25,000 barrels/d of crude,” he said.

“The regional market provides the opportunity for small scale LNG that can be trucked to off-grid miners in Zambia and the Congo to replace diesel powered generators. In terms of the regional markets, South Africa is facing an acute gas supply deficit in the near future between 1 and 2bn ft/day and so there is the opportunity to supply a healthy market that commands strong gas prices. This will enable Zimbabwe not only to replace imported products but also export gas and generate foreign currency for the country and improve the balance of payments.

“We see a great opportunity to become a significant regional player in a high value market that is not well understood by the majority of the industry, but somewhere where we feel have a great competitive advantage,” he concluded.

In April 2018, Interpose Holdings (now Invictus Energy) acquired a 100% interest in Invictus Energy Resources along with an 80% shareholding and operatorship of the highly prospective Cabora Bassa Project, also known as Special Grant 4571. One Gas Resources, a Zimbabwean entity, holds 20% stake in Geo Associates, the joint venture company formed to implement the Cabora Bassa Project that encompasses Mzarabani (Invictus spells the project as Mzarabani). Zimbabwe is believed to have substantial hydrocarbon resources in the Zambezi Valley in the north, the southeast Lowveld, Gokwe in central Zimbabwe and the Lupane-Hwange area to the west. However, because of limited exploration the full potential is unknown.

Probably the earliest and most comprehensive exploration to ever happen in the country was conducted by American giant Mobil Oil between 1989 and 1993 in the Zambezi Valley.

After spending $30mn in its quest for a big oil discovery, Mobil abandoned the acreage when it established that it contained more natural gas than oil. But its exploration work generated a wealth of surface and subsurface data, including gravity surveys and over 1,600 line kilometres of 2D seismic data. Equipped with more modern technology to deepen its understanding of the data, Invictus started, from early 2018, to re-process and re-interpret the legacy information on an asset the company determines is “potentially the largest, seismically defined, undrilled structure in onshore Africa.” It has similar geological characteristics to the Rift Basin petroleum systems in Uganda, Kenya, and South Sudan further north of Zimbabwe, as well as the Australian Perth and Cooper-Eromanga basins.

Since then, the Mzarabani project has scored more milestones than older coal-bed methane (CBM) and natural gas prospects elsewhere in the country. In May 2019, Invictus signed a memorandum of understanding with Sable Chemicals, the sole manufacturer of agriculture-grade ammonium nitrate fertiliser in Zimbabwe. The non-binding deal entails Sable buying 26bn ft3/yr for 20 years when the project comes on stream.

Two months later, Invictus announced that UK Getech Group had completed an independent study which found a total prospective resource estimate of 9.25 trillion ft3 and 294mn barrels of conventional gas/condensate (gross mean unrisked) at the Mzarabani and adjacent Msasa projects. 

In addition, UK-based Envoi has been engaged to run a farmout of the SG 4571, likely next year.

Fred Moyo, a former senior mining industry executive and deputy minister of mines and energy now an independent mining consultant said that the progress that Geo Associates has made so far is encouraging. “That is genuine progress that you cannot see anywhere else in respect to that resource in the country,” he said. “And chances of a discovery are high given that the sediment that has yielded substantial discoveries elsewhere is similar to that at Mzarabani.”

Geo Associates opened an office in Zimbabwe in September 2019.  It has engaged two consultants, one to undertake an environmental impact assessment which will pave way for drilling next year and another to recruit staff.

The environmental impact assessment which includes consultation with the local communities in the project area is in progress.  Once an environmental management plan to be compiled after the impact assessment is approved by the government the project will enter the drilling and development phases. According to a timeline by Invictus, some infill seismic is targeted for the first quarter of 2020 to refine the drilling targets with drilling projected to start in the second half of that year.

The joint venture is likely to drill more wells than one with the overall budget to depend on where they will secure a suitable rig, One Gas Resources CEO Paul Chimbodza told NGW.

The progress in Mzarabani has lifted the spirits of Zimbabwe, a country troubled by well-documented economic problems such as triple-digit inflation and fuel shortages as well as widespread food insecurity caused by frequent droughts affecting hydroelectricity as well as agriculture. If a commercial discovery is made and development undertaken, gas to power projects can assist in solving some of these.

Whereas Invictus is primarily an upstream entity, Chimbodza said, his company sees itself being more involved in midstream and downstream activities.

“We are keeping our fingers crossed for positive drilling results as we have set ourselves up to participate in the midstream and downstream activities of the value chain. A number of downstream business openings for us are currently being evaluated,” he said.

Gas from Mzarabani is billed to be an integral part of the country’s Programme for the Development of Energy from Mineral Resources Plan that was approved by the cabinet of the president, Emmerson Mnangagwa, October 8. 

The blueprint seeks to develop energy from mineral resources including natural gas and CBM to ensure Zimbabwe becomes a net exporter of electricity and fuel by 2030.

“This will principally be achieved through the extraction of coal-bed methane for power generation; the production of liquid fuel from coal; generation of electricity from coal; and the development of oil and gas potential in the Mzarabani, Gonarezhou and Manicaland areas,” the industry and trade minister Mangaliso Ndlovu told journalists October 8 after the cabinet meeting.

On October 14, Mnangagwa unveiled a strategic roadmap towards the achievement of a $12bn mining industry by 2023. Hydrocarbons and coal are projected to contribute $1bn, with gold and platinum seen dominating at $4bn and $3bn respectively.

Moyo however warned that a lot more work still has to be done on an undertaking that is typically demanding financially and long term. “They are planning to start exploration drilling which is a high cost undertaking,” he said. “If, as the nation hopes, they make not just a discovery but a commercial one, much more effort will have to be put in attracting the right investment. I see a cycle where the focus of natural gas investment is on southern Africa for now. Mozambique announced a $20bn investment [in the first of two onshore LNG export projects] in June and more announcements are expected. Tanzania is on track too. Therefore, Zimbabwe can take an opportunity. However, the right policies are needed, policies which must not be changed haphazardly. Zimbabwe needs to come up with a gas policy now. Without that nobody will invest in gas.”