Green Governance Zimbabwe Trust (GGZT) says oil and gas prospects in Muzarabani, despite offering unique investment opportunities, should be viewed with cautious optimism, as mineral wealth seldom translates to development.
This follows the recent signing of a petroleum exploration development and production agreement (PEDPA) between the Government of Zimbabwe (GoZ) and two Australian arms Geo-Associates and Invictus.
Geo-Associates owns the controlling stake in Invictus Energy, the Australia Stock Exchange-listed company which made significant progress in exploring oil and gas in Muzarabani.
In a press statement, GGZT said it has been closely monitoring development in Muzarabani where reprocessed data gathered, Mobil in the1990s shows evidence of the potential existence of oil and gas.
“GGZT views this new territory of untapped oil and gas deposits with cautious optimism despite unique and competitive investment opportunities, given that the industry has various potential downstream linkages.
“Previous experience of mining revenue- even in many resource-rich African countries, shows natural resource wealth does not always translate into sustainable economic development and improvement of human livelihoods.
“Broadly, GGZT urges government to adhere to principles of good governance, embrace Free Prior and Informed Consent (FPIC), community beneficiation, environmental degradation, and tax compliance to avoid conflict issues like the Mozambican case.
“As envisioned by GoZ is targeting energy self-sufficiency yet this cannot be a goal in itself if it does not stimulate a green industrial revolution which to sustainably implement poverty alleviation as a key priority given our low socio-economic status.
Apart from the potential for energy self-sufficiency, electricity generation, production of liquid petroleum, liqueed petroleum gas (LPG), fertilizer production and petrochemicals, opportunities which must be leveraged,” read part of the statement.
Mines and Mining Development Minister, Winston Chitando recently signed on behalf of government with the international rms involved in hydrocarbons prospecting to start a development programme for the asset.
On its part government has been touting the oil and gas prospects as a game changers, with Chitando claiming that successful exploration could see the country producing oil by next year.
Chitando said the signing of the PEDPA-which provides the framework for rapid progression of the Muzarabani oil and gas project offers value chain benefits, new investments and technologies accruing from exploration.
However, without open contracting, a globally accepted norm which boost transparency and accountability, anticipated investments of between US$15 million and US$30 million to drill two oil and gas test wells in Muzarabani by October 2021 could be without tangible benefits.
GGZT admits that general development of oil and gas can unlock foreign revenues, create jobs and boost economic growth, but urges government, based on previous experiences, to promote responsible investment.
Delays in the finalization of amendments to the Mines and Mineral Bill was also pointed as a structural barrier to successful exploitation of vast mineral wealth, with recommendations for the enactment of a Petroleum Law.
“It is without doubt that successful exploration of Zimbabwe’s oil and gas industry represents a huge,
unique and competitive investment opportunities given the signicant potential for value chain
“GoZ must demonstrate commitment to improve the regulatory environment of the mining sector first, consult widely on the exploration of hydrocarbons, including gas with a view of setting a comprehensive Petroleum Law.
“These announcements have given rise to much excitement for ‘ordinary’ Zimbabweans hoping for improvements in their living conditions, it seems government is looking forward to billions of dollars in export revenues and foreign direct investment (FDI).
“As there has been hardly any progress in amending the Mines and Minerals Bill a key legislation, the new oil and gas subsector presents another huge opportunity for government to chart a new path of promoting good governance,” said GGZT.