Madagascar Oil Sees Crude Sales as Early as Next Year

Source: Reuters 11/27/2013, Location: Africa

Madagascar Oil, which began producing oil in May for its own steam generators, aims to have a plan approved next year to allow it to begin the country's first commercial sales, its chief operating officer said.

The island off Africa's east coast is part of a new scramble for hydrocarbons in the region which has included significant gas finds off the coasts of Tanzania and Mozambique. Madagascar Oil uses steam injection methods to extract crude from its inland operations in a remote, western section of the island.

"With any thermal project fuel is a major issue. Some of our projections are that we will use 20 percent of the crude that we produce for steam generation," Stewart Ahmed told Reuters on the sidelines of an Africa oil conference in Cape Town.

The project is still in its exploration stage so Madagascar Oil does not have a license to sell any of the oil it has extracted so far but it intends to declare commerciality in around February of next year. A development plan must then be submitted to the Malagasy government within 180 days of that declaration.

"It will be subjected to significant scrutiny as it is the first time that the Madagascar authorities will have been confronted with a hydrocarbon development plan. So we are going to put in a thorough document," Ahmed said.

When that is approved, the company can then move to commercial sales.

The aim in the first two or three years is to produce around 10,000 barrels per day from its Tsimiroro heavy oil field and then slowly crank output up.

"With this resource it is realistic to talk in terms of 100,000 to 150,000 barrels per day peak oil," Ahmed said. He said it would probably take over a decade to get there.

The Tsimiroro field has estimated resource of around 1.7 billion barrels of oil in place. Much of the oil will likely be used in Madagascar for power generation.


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