Source: Govt signs landmark petroleum production deal – herald
Oliver Kazunga-Senior Reporter
ZIMBABWE yesterday took a major step towards becoming a petroleum-producing nation after Government signed a landmark agreement expected to slash fuel imports, strengthen energy security and unlock massive investment in the Cabora Bassa oil and gas project.
The Petroleum Production Sharing Agreement (PPSA), signed between the Government and Geo Associates (Private) Limited under Special Grant 4571, provides the legal and fiscal framework governing petroleum exploration and production in northern Zimbabwe.
This comes as Invictus Energy, the Australian firm spearheading exploration in Muzarabani and Mbire districts, advances one of the most significant hydrocarbon discoveries in Sub-Saharan Africa in recent years.
In 2023, Invictus confirmed a major gas-condensate discovery within the Mukuyu structure in the Cabora Bassa Basin.
The discovery from the Lower and Upper Angwa formations was ranked the second-largest oil and gas find in Sub-Saharan Africa in 2023, with an estimated 230 million barrels of oil equivalent or 1,3 trillion cubic feet of gas from only two wells drilled within a 200-square-kilometre structure.
Invictus, which has invested more than US$100 million in exploration activities since 2022, recently secured an additional US$10 million capital raise as it prepares for the high-impact Musuma-1 exploration well.
Last December, the company announced the completion of negotiations for the PPSA, paving the way for yesterday’s signing ceremony in Harare.
The signing was conducted by the ministries of Finance, Economic Development and Investment Promotion, Mines and Mining Development, and Energy and Power Development, together with Invictus and its local partner Geo Associates, the licence holder for Special Grant 4571.
Speaking at the signing ceremony, Finance Minister Professor Mthuli Ncube described the agreement as a strategic breakthrough in Zimbabwe’s drive towards energy self-sufficiency, industrialisation and sustained economic growth under Vision 2030.
He said the project carries enormous potential to reduce the country’s dependence on imported fuel while strengthening the balance of payments position.
“As Government, we are particularly encouraged that this project has the potential to reduce Zimbabwe’s import dependency on petroleum products and strengthen national energy resilience,” said Prof Ncube.
“This is critical for improving our balance of payments position, stabilising production costs across sectors of the economy and supporting long-term macroeconomic growth.”
Zimbabwe spends significant amounts of foreign currency annually on fuel imports, placing pressure on reserves and increasing operating costs across key sectors such as mining, agriculture, manufacturing and transport.
Natural gas and light oil condensate are considered flexible and cleaner fuels for power generation and industrial use.
Against this background, Government granted the Cabora Bassa project National Project Status, unlocking a range of fiscal and non-fiscal incentives including tax holidays and reduced corporate tax rates to accelerate development.
Prof Ncube described the venture as a strategic national undertaking capable of transforming Zimbabwe’s economic landscape through enhanced energy security, infrastructure development and downstream industrial expansion.
“Today’s event is not merely the signing of a commercial agreement. It is a statement of confidence in Zimbabwe,” he said.
“It is a declaration that Zimbabwe is indeed open for business, committed to sustainable resource development and determined to unlock the full value of its natural endowments for the benefit of present and future generations.”
Prof Ncube added that Government expects the project to contribute significantly to Gross Domestic Product growth, foreign currency generation, employment creation, technology transfer and broader investor confidence.
The agreement also contains provisions covering local employment and training, domestic procurement, environmental protection and community development.
Prof Ncube said the signing demonstrated the country’s commitment to developing its energy sector using modern, commercially viable and internationally aligned frameworks.
“This is a significant step towards positioning Zimbabwe as an emerging energy producer within the region,” he said.
The immediate focus now shifts to the Musuma-1 exploration well, which is expected to determine the prospectivity of the eastern Cabora Bassa Basin.
If hydrocarbons are confirmed, the well will undergo logging, testing and evaluation to determine reservoir pressure, flow rates and fluid characteristics.
Early production testing could pave the way for pilot gas-to-power projects within 12 to 18 months, potentially marking the beginning of the country’s transition from a fuel importer to an emerging regional energy producer.
The second phase of development will involve further seismic studies, appraisal drilling, resource certification and securing gas sales agreements to unlock full-scale field development financing.
Mines and Mining Development Minister Dr Polite Kambamura described the agreement as a defining milestone in the advancement of the country’s petroleum sector.
“It’s one of the signature agreements that have been signed in this region,” he said.
“It will open doors for more funding for the project and other exploration activities. Our doors are open and this is testimony that Zimbabwe is truly open for business.”
Invictus Energy managing director Mr Scott Macmillan said the agreement establishes a stable and transparent framework that would not only govern the Cabora Bassa project, but also serve as a model for future petroleum investments in Zimbabwe.
“This framework provides a fair share of returns to investors, but also to the citizens of the country,” he said.
The post Govt signs landmark petroleum production deal appeared first on Zimbabwe Situation.