Australia’s Invictus Energy is hopeful it will “within weeks” conclude a production sharing agreement (PSA) with the Zimbabwe government to develop its Cabora Bassa project following years of delays.
The PSA is an important missing element as Invictus seeks to commercialise gas discoveries in the north of Zimbabwe, with energy consultancy Wood Mackenzie estimating that Mukuyu was the second largest discovery made in sub-Saharan Africa last year behind Shell’s Jonker-1 find offshore Namibia.
Robin Sutherland, an industry veteran and non-executive director at Invictus, said a team met with senior government officials last week where the Zimbabwe central bank governor John Mangudya indicated he would lead government negotiations.
“He wants to fast-track the negotiations to get them done and mentioned weeks rather than months or years,” Sutherland said.
The PSA has been held up for around four years and is key as Invictus looks at early stages to commercialise the discovery, with miners in the energy-starved country among potential off-takers, he said.
Invictus Energy, which will undertake 3D surveys and test the Mukuyu-2 well to determine its flow rate, has already signed a gas sales pact with Mbuyu Energy for a 500MW gas-to-power project.
“We have customers begging for power and we are close to the grid,” Sutherland said of possible plans to get a small gas processing facility in and hook it up to a generator for power.
The first steps to commercialise its Zimbabwe project might be taken in the next year or two, he added, although nothing had been finalised yet.
Product sharing
In 2021, Invictus and the government signed the Petroleum Exploration Development and Production Agreement (PEDPA). The agreement sets regulations that will govern both Invictus and government through the exploration, appraisal, development and production phases and the obligations and rights of each party over the project lifecycle.
Invictus and the government have also agreed that government, through the Mutapa sovereign wealth fund, will be granted a 10% back-in-right within six months of a final investment decision being made to go ahead with any commercial development. A back-in-right contract allows the government to take up shares in the operation once a commercial discovery has been made. – (NewZWire)
