Focus Media (Kigali)
Sam Ruburika
21 October 2009
The Canadian firm Vangold is continuing its exploration of the Kivu region to find oil, State Minister Butare warns that there are no guarantees that we might get as lucky as neighbor Uganda.
Two years ago, Vangold Resources Ltd, a Canadian oil, gas and mineral company, approached the government seeking its permission to explore the Kivu graben for oil.
That request was partly driven by the discovery of oil deposits in the Albertein graben by Tullow Oil, a London-registered company as well as the Canadian enterprise Heritage Oil, which have made significant discoveries in Uganda. The other fact is that Kivu graben is regarded as the extension of the Albertein graben and could thus contain oil deposits as both are located in the Western rift valley.
According to Albert Butare, the Minister of State in the Ministry of Infrastructure in charge of water and energy, it was Vangold's initiative to approach the government as the latter had no knowledge of possible oil deposits in the Kivu graben.
He points out that Vangold's idea was to first examine the Kivu graben by satellite using facilities at Massachusetts Institute of Technology (MIT) in Boston to conduct surveys which would pick up oil seeps in and around the lake.
And indeed, Vangold did find some oil seeps, yet these were no absolute guarantee for the effective presence of oil. Nevertheless, the company was optimistic that there could be oil on the concession block dubbed the White Elephant that covers over 2700 square miles and straddles both Rwanda and the DRC.
Therefore, it has even agreed to conduct the first exploration phase of the oil program of technical evaluation which included geochemical profiling, air magnetic and gravity survey on its own costs.
"Vangold was willing to sink large sums of money into the first phase of oil exploration," Butare confirms.
Though there were challenges, especially concerning the topography of the area and the multi-layered lake, the survey did indicate that there was a basin in the lake.
Initially, Vangold and the government had agreed that the technical evaluation surveys were to determine whether there is oil in Kivu graben within 18 months. However, the timeframe expired due to the difficulties in acquiring the right technology to complete the technical evaluation. "There are not many special planes designed to conduct aerial reconnaissance and it takes time to acquire and transport them," Butare indicates.
Lake destabilization
The State Minister reveals that the company is now geared towards conducting a seismic study on Lake Kivu, which will finally zero in on the area where the drilling will be carried out.
Concurrently, the government has entered in talks with Vangold technical team in conjunction with Texas-based University of Houston to design and develop a terms of reference for a Special Hydrocarbon Exploration License (SHEL) which will allow the company to conduct a lab simulation of running a seismic study on lake Kivu.
SHEL will see samples of Lake Kivu water taken to special lab in Houston to determine whether the lake would destabilize and other environmental impacts that might be associated with the seismic study.
"We do not expect any lake destabilization risks but it is necessary to perform lab simulation," Butare notes.
Though there are no risks anticipated, both parties are keen to ensure that the environmental assessment is done as a matter of prudence.
In a joint communiqué by the ministry of infrastructure and Vangold issued to The Rwanda Focus, Vangold's President and CEO Dal Brynelsen said that "once the impact assessment is completed by the end of the year, an integrated seismic, gravity and magnetic work program will be undertaken in the first quarter of 2010."
According to the communiqué, Vangold is currently holding discussions with numerous seismic companies that specialize in lake and marine seismic programs. However, the company is weighing up on bringing its own boat and hiring both crew and equipment to undertake the program.
The seismic study is expected to cost upward of US$ 3 million, paid for by Vangold. The study will take two months after which if a large oil pocket is found, the company will conduct a more detailed seismic study or drill a well.
"A decision to drill a target will be based on the location of the deepest part of the basin which generates oil and what the seismic program would assist to locate reservoirs where the oil generated in the basin accumulates without leaking," the communiqué read in part.
Huge losses
Despite the progress made and the moves being keenly calculated, neither Vangold nor the government is quite sure whether there is sufficient oil in Lake Kivu basin until a thorough seismic study is carried out.
"We are both not sure whether there is ample oil in the basin due to the probabilities involved. Sometimes while drilling the company can hit a dry well and as a result the losses are immense," Butare warns.
Since there is no sufficient proof to indicate that there is oil in Lake Kivu, the government does not want to assure the public, which would haunt it if there is no oil or for that matter sufficient oil is found. "We are impatiently waiting but at the same time we do not want to speculate on the oil issue," Butare remarks.
Nevertheless, Vangold is adamant and wants to go on with the seismic program. According to a well placed source, the drive behind Vangold comes after the company's pessimism cost it a lucrative oil exploration opportunity in Uganda which saw Heritage and Tullow oil succeed.
"It is believed that Kivu graben is the Southern extension of the Albertein graben with high possibilities of oil deposits and Vangold does not want to repeat the mistake," the source said.
Though the possibility of getting oil in the Kivu Lake is quite high, the government has decided to tread slowly about the whole oil business. "We have to be careful and ensure we get a better deal as it would be unwise to tie the country on the wall for say twenty years," Butare cautions.
It is for this reason that for any matter pertaining to oil exploration, different Ministries such as finance, trade, and justice are involved and backed up by numerous experts in oil business to ensure that the country gets a better deal.
"We are also getting assistance from World Bank experts to make sure that we are doing the right thing," Butare points out.
In the meantime, with help of highly qualified professionals the government is developing a petroleum exploration policy and act which according to Butare will be based on top notch standards. "The legislative frame work should be completed before Vangold makes a decision to drill," Butare says.
When contacted for comment, the Vangold Kenya representative who oversees the company's exploration program in the country pointed out that only the ministry had the right to speak on matters related to Kivu oil exploration.
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Maybe you'll get lucky. Maybe they'll find only a small amount of oil, and you can avoid recolonization. Here's hoping that you find your oil slowly and develop it slowly, so that it never becomes the "oil curse".