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Editorial Comment: Oil, gas could give Zim financial freedom

08 Nov, 2018 - 00:11 0 Views
Editorial Comment: Oil, gas could give Zim financial freedom

The Herald

It’s not too early to start celebrating potential oil and gas discovery in the Muzarabani basin of Mashonaland Central Province as studies from the 90s using modern technology have given Zimbabwe reason for optimism.

Fundamentally critical as the nation awaits final results of the exploratory work being undertaken, we should not forget that the only way maximum benefits can be drawn from this finite resource is to value-add and beneficiate it.

There are numerous products that can be extracted from the oil that can generate billions for Zimbabwe in foreign currency such as butane, fuel oils, petrol, diesel, paraffin, liquefied natural gas, and liquefied petroleum gas, propane among others.

Other products might also include micro-crystalline wax, napalm, naphtha, naphthalene, paraffin wax, petroleum jelly and wax, refined asphalt and refined bitumen among many other chemicals used for industrial processes.

President Mnangagwa testified in the presence of the project developers, on the strength of old and new study evidence, to the possibility of the existence of oil and gas in the Muzarabani basin.

Also exciting is the fact that drilling, as part of further exploration to confirm the deposits, commercial viability and feasibility of the Muzarabani oil and gas energy project, could start as early as next year.

But it is the potential socio-economic transformation that the multi-billion dollar oil and gas industry can bring upon if fully valued added and beneficiated. Many countries in Africa, including Egypt, Libya, Nigeria and Angola depend on billion dollar revenues from their petroleum riches.

Zimbabwe faces a vicious economic crisis following years of stagnation compounded by the West’s illegal economic sanctions regime which compromised provision of basic social services, due to limited resources, especially foreign currency. An emerging market with so much potential to write a fairytale economic success story never heard of in Africa or even in the world, the commodity has to reach different markets in the world in its various forms of finished products.

That Zimbabwe has no access to external lines of credit in light of the US sanctions regime, a situation compounded by a history of default. Our natural resources are thus what the doctor ordered.

The Muzarabani oil project has high potential to produce 3,9 trillion cubic feet (tcf) of natural gas and 181 million barrels of conventional gas, Australia-listed company, Invictus Energy, has confirmed. A maiden resource estimate report released by Invictus this week said the Muzarabani project had net mean recoverable conventional potential of 680 million barrels of oil equivalent (boe), consisting of 3,9 tcf and 181 million barrels of condensate or conventional gas.

The report was completed by a leading petroleum consultancy firm, Netherland, Sewell and Associates. The 3,9 tcf of natural gas can give the country 500 megawatts of power for 40 years, while 181 million barrels of conventional gas can give Zimbabwe enough fuel for the next 20 years at current consumption levels of 25 000 barrels per day.

This would have a huge socio-economic impact in a country with high unemployment.

With the discoveries and through backward and forward linkages, ordinary Zimbabweans starting from people in Muzarabani are set to have their lives transformed.

The economic activities in Muzarabani are predominantly agriculture-driven and in most cases the rains are erratic. If fully beneficiated, the development would result in massive transformation through construction of infrastructure such as roads, schools, hospitals, commercial centres, employment creation in Muzarabani and surrounding areas.

Extraction of oil would also earn Zimbabwe billions in foreign currency annually, part of which would accrue to Treasury and be used to develop other critical infrastructure and provision of social services countrywide.

Further, revenue from oil would reduce the country’s propensity to rely on foreign lines of credit, enable it to better service current debts and where need be open access to cheaper lines of external credit given it would have an attractive credit profile.

Hence as the leadership puts final touches to the deal, they should never overlook the importance of value adding our natural resources before exporting them.

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