The Malawi government has issued permits to United Arab Emirates company Rakgas and Singapore’s Pacific Oil & Gas for hydrocarbons exploration in the Lake Malawi and Shire Valley areas.

Says Department of Mines deputy director Atileni Wona: “Government has come up with the decision to award the two firms the prospecting permits following recommendations from the licensing committee, which met last October.”

Malawi awarded exploration permits to South Africa’s SacOil in 2012 and to the UK’s Surestream Petroleum in 2011.

Surestream has already completed an environmental-impact assessment (EIA) study and is now waiting for approval from the country’s Environmental Affairs Department to start exploration activities.

SacOil has been involved in desk work to accumulate more data from surveys that were undertaken in its block, and expects to complete an EIA in the third quarter of 2014.

Investigations conducted by Malawi’s Geological Survey Department (GSD) have unveiled considerable potential for oil and gas reserves in Lake Malawi and the Shire Valley area.

The GSD’s work has been complemented by previous work conducted by various research institutions, including the Cenezoic Environments and Geodynamics of African Lakes Project in 1981.

The seismic reflection data collected by Project PROBE between 1985 and 1987 revealed four sedimentary sequences in the lake’s stratigraphy. “The available information raises the potential of the lake as a target for hydrocarbon exploration. Further geophysical work and the sinking of a stratigraphic well to establish the nature of the rocks, the thickness of the sedimentary sequence and the occurrence of hydrocarbons are highly recommended,” says the GSD.

Meanwhile, Malawi is developing a model oil mining agreement, which will form the basis of any deal with companies wishing to produce oil in the country.

Wona reports that the Ministry of Mining has engaged international experts, who are working with government to come up with the model agreement, aimed at ensuring a win-win situation for government and investors.