Vanoil Energy Ltd. (VEL) is discussing with the Rwandan government the option of allowing other companies to help explore the country’s East Kivu Graben Basin as they seek to end a dispute over exploration rights.
“It is possible that a settlement or an agreement between the parties might allow other companies to come in, but we’ll have to wait and see where we get at with the agreement,” Chief Executive Officer Sam Malin said in an interview today from Cape Town, South Africa.
The Canadian oil and gas explorer said in September it had the sole rights for a production-sharing contract in the northwest block after signing a technical evaluation agreement and spending $3 million on exploration. The company said then it would seek a conciliation session with the East African government after talks for the concession broke down in June.
“We’ve moved on from that,” Malin said. “Vanoil and the government are in discussions on an appropriate solution, settlement if you like, that’s fair to both parties without going through costs, et cetera, that everybody would incur if we were to go down the arbitration route.”
Rwanda is trying to leverage its natural resources to accelerate growth in the $7 billion economy, which is now mainly dependent on coffee and tea exports and tourism. Gross domestic product is forecast by the International Monetary Fund to increase 7.5 percent both this year and next.
Investment in East Africa’s oil and gas industry has surged since the 2006 discovery of oil in Uganda, while Kenya found its first crude deposit last year and Tanzania and Mozambique hold large natural gas reserves off their coast.
Rwanda’s Minister of State for Mining Evode Imena said this month the government was in late-stage discussions to secure “the best oil exploration companies that can handle the work” in the Kivu basin and that the next step was to conduct a three-dimensional seismic survey.
“We are far from getting the picture of the amount of oil deposits that lie in Kivu basin,” Imena said. “The 3D seismic will give the full picture on the amount of deposits.”
Elsewhere in Africa, Vanoil also has exploration rights to two inland blocks and a 10 percent working interest in offshore acreage in Kenya. It holds a 25 percent participating stake in two offshore areas of Seychelles, along with partner Afren Plc (AFR), according to the British Columbia-based company’s website.
Malin, a former non-executive director at Vanoil, this month replaced Aaron D’Este, who stepped down because of health reasons, the company said on Nov. 15.
To contact the editor responsible for this story: Nasreen Seria at email@example.com