Zambia set to issue oil licenses by November

Zambia will issue oil and gas exploration licences to seven foreign and local companies by November in a bid to become an energy producer, after it passes laws on new licensing fees, Mines Minister Maxwell Mwale said.

Mwale said on Friday the seven companies had already been selected and had even been allowed to visit some of the 23 exploration blocks in six of the southern African country’s nine provinces, where it expects to strike oil despite initial difficulties in attracting investment to the sector.

Mwale said Africa’s largest copper producer also was looking to diversify its economy further by mining uranium for nuclear fuel. He urged the two firms that have been granted licences in the sector to get their act together quickly or risk losing their right to mine.

Britain’s GP Petroleum and Petrodel Resources, Glint Energy of the United States and Exile Resources of Canada were chosen along with Zambian firms Majetu, Barotse Petroleum Company and Chat Milling Company Ltd to explore for oil and gas.

“We have offered a number of blocks to successful bidders, but we have to pass legislation before we grant the licenses,” Mwale told Reuters in Nairobi on the sidelines of a regional meeting on illegal mining.

“We shall grant them licences hopefully well before November,” he said.

Mwale said the new laws would establish the fees for the licences and other regulations governing the sector.

“We are very confident that we will find either both oil and gas or gas. We share the same geological formation with Uganda and parts of Tanzania, so unless we are to be like Israel, where everyone around you has got oil except yourselves, we are hopeful that we shall find oil,” he said.


Zambia, which relies on copper mining for most of its foreign exchange earnings, has said soil samples sent to European laboratories have shown good traces of oil, particularly in areas bordering oil-producing Angola.

Uganda struck commercial hydrocarbon deposits in 2006, and production is forecast to begin in the last quarter of 2011, while Tanzania produces significant quantities of gas.

Mwale said results of the exploration would take a while to come through because of the depth of the drilling required, work which can only be undertaken in the dry season.

Mwale said junior companies were taking the lead in exploration, but he suspected the bigger players would start preying on them if they struck it rich.

On uranium, Zambia granted mining licences to Toronto-listed Denison Mines Corporation and African Energy Resources of Australia, but Mwale said little had been done so far in getting output off the ground.

For their part, the companies have blamed low uranium prices and difficulty in raising financing to build a processing plant.

“To be fair, the resources found in the southern provinces are not too big, and the two companies are collaborating to set up a joint processing plant because they found it unviable to go it alone. But if they do not do that quickly, we may re-possess their rights to mine,” Mwale said.

“In our country we employ the use-it-or-lose-it principle. If you don’t use it they will lose. They were given the licenses in the latter part of the first quarter this year,” he said.
Source: Reuters

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