OIL and gas firm, Invictus Energy Resources (Invictus), has concluded a production and profit-sharing agreement with government, which is now being scrutinised by a private consulting firm, Zimbabwe Independent has learnt.
As spelt out by the proposed contact, government and the petroleum player will share oil output and profits, though the sharing ratio and margins remain unclear.
GEO Associates, in which Invictus holds an 80% stake, has already invested US$3,5 million exploring for oil and gas reserves in Muzarabani, along the Zambezi River basin.
The company has been working in the absence of a hydrocarbons policy and related frameworks necessary in governing and regulating the sector and government.
Geo Associates has also obtained the Environmental Impact Assessment certification after it was granted the green light by the Zimbabwe Investment Development Agency (Zida) to set up operations.
Sources close to the development this week told the Indepedendent that the document was now going through an assessment process with an inter-ministerial committee having been set up specifically for this purpose, working together with the ministry of mines.
“An inter-ministerial committee has been set up to deal specifically with this matter and the document is now sitting with the Ministry of Mines. After this, the document will have to pass through the attorney general’s office but in a week or two the document will be signed,” a source said.
Mines and Mining Development minister Winston Chitando confirmed the development on Wednesday saying: “Yes, the agreement is being finalised and it will be signed before the end of the month.”
Apart from this process, sources have also said the government has hired a consultancy firm to assess the agreement.
There have been concerns that the government’s spirited rush to finalise the hydrocarbons policy and related agreement frameworks when Geo Associates has already set up operations in Zimbabwe, posed the risk of monopolising the sector, as is the case with the biofuels industry.
The biofuels industry, which primarily revolves around petrol blending, is dominated by Green Fuel that produces ethanol in the country.
Zimbabwe discovered that it has substantial amounts of gas in the Zambezi basin in the early 1990s following exploration work conducted by American petroleum conglomerate, Mobil Oil.
At that time, Brent Barber, who is now Invictus Energy technical director, was working for Mobil, with the primary responsibility of co-ordinating the petroleum giant’s exploration for oil along the vast Zambezi basin.