Lens Through Invictus Energy’s Gas Market Opportunity in Zimbabwe- Africa’s Lucrative Rift Basin

An independent oil and gas explorer, Invictus Energy Limited (ASX: IVZ) is the first mover in the Cabora Bassa Basin in Zimbabwe, which is amongst Africa’s largest under-explored interior rift basins.

IVZ aims to tap the high-impact energy resources located in the sub-Saharan region of Africa. Its asset portfolio consists of the SG 4571, which comprises of the Mzarabani conventional gas-condensate prospect - a seismically defined structure and the largest undrilled one in Africa (onshore) with TCF+ potential.

IVZ has a simple strategy- to build a portfolio of high potential oil and gas assets and contribute to the development of the region and communities it works in. It aims to tap under-explored/ emerging play types before larger companies and uses its technical expertise and the experience in the region to deliver benefits to all the involved parties.

Let us now look at the Company’s market opportunity in the lucrative region of Africa- Zimbabwe.

Casting Eye over Gas Market Opportunity in Zimbabwe

Zimbabwe is relatively industrialised compared to a majority of African countries. It also serves as the gateway and import/export corridor for Zambia, Botswana, DRC and Malawi to the port of Beira in Mozambique.

This Southern African country is a land-locked country and has been a major route for migration and trade.

However, Southern Africa is desperately short of gas and is facing an energy crisis with increasing shortages of electricity hampering industry and investment.

The South Africa gas supply from onshore Mozambique (supplying 85% gas) and offshore Mossel Bay (supplying 15% gas) is shrinking. The northern Mozambique Rovuma gas fields in unlikely to cater to the regional market in near to mid-term with lack of consumers along potential pipeline route, committed LNG export volumes post 2030 and long distance to market.

The significant gas deficit expected before 2030 is primarily due to lack of supply-

• Low Scenario Supply Deficit: 730 mmscf/d (268 PJ/year)
• Medium Scenario Supply Deficit: 1,100 mmscf/d (407 PJ/year)
• High Scenario Supply Deficit: 2,000 mmscf/d (725 PJ/year)

The Gas Sale MoU signed with Sable Chemical Industries Ltd to replace imported ammonia or 70 mmscf/d for 20 years demonstrates strong local gas demand.

To ease the energy crisis in the region, Southern African Power Pool (SAPP) was established in 1993 to facilitate cross-border electricity trading between states. Zimbabwe, the spine of SAPP and an efficient transmission network, gives the greatest access to other member states.

Zimbabwe - A Strategic Location Enjoying Regulatory and Government Support

Zimbabwe has a history of political and economic instability, which consequently led to overlooking efficient jurisdiction. However, the new government is renowned for being pro-business, promoting foreign investment and has implemented investor friendly reforms.

The New Zimbabwe President, Emmerson Mnangagwa stated that the country is well open for business. Specifically, for the mining industry, an experienced mining industry executive has been appointed as Minister of Mines- Hon. Winston Chitando. He is a former resources industry executive and understands the needs of the resources sector.

The Government has taken necessary steps to ease the mining business in Zimbabwe-

• The Indigenization and Empowerment Act has been amended, which provides 100% foreign ownership of assets and remittance of earnings with a guarantee of investor rights.
• Special Economic Zones (SEZ) legislation has been duly enacted, indicating a 5-year tax holiday, 15% corporate tax rate thereafter, no CGT and Customs duty exemption on raw materials and capital equipment. Moreover, Offshore banking and transacting outside local financial system safeguards are provided against local currency effects.

Invictus’ Developments in Zimbabwe

Invictus completed the acquisition of the Cabora Bassa Project in June 2018 retaining 80% ownership and operatorship. Geophysical and geological results have been positive to date and depict the de-risking of the acreage - ingredients for working petroleum system are obtainable in the basin.

The Company has been effectively progressing at the Project to aid a market that is supply constrained.

In 2019, IVZ focused on the technical work program of the Cabora Bassa Basin petroleum system understanding and de-risking the project. It reprocessed the entire gravity and magnetic dataset covering the whole of Zimbabwe, transcribed field tapes and reprocessed all seismic data in the basin, initiated an Environmental Impact Assessment and opened up its county office in Harare, besides signing an MoU with Sable Chemical Industries for 20 years.

Commencing FY 2020, IVZ intimated about the farm-out process in progress to select partner to participate in high impact basin opening well. It has also received positive geochemical analysis results from its new outcrop source rock field sampling program conducted in July 2019.

IVZ recently received binding commitments for a Placement to raise $1.5 million to ramp up developments at the Cabora Bassa gas-condensate asset.

To Read more about Cabora Bassa Basin Developments- READ HERE.

On 17 December 2019, the IVZ stock quoted $0.028.

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