Southern African News Features                                           SANF 09 No 14, July 2009
Zambia issues tenders for oil exploration
by Patson Phiri

Zambia has issued an international tender for oil companies to explore 23 blocks in its North-Western, Western and Eastern provinces after samples collected in 2007 confirmed traces of oil.

Preliminary geological surveys conducted in the three provinces -- two of which share wide borders with oil-rich Angola -- all confirmed the presence of oil.

Mines and Minerals Development Minister Maxwell Mwale said the government has since finalized work on a document to invite interested investors to bid for up to seven exploration blocks each.

"We have started a very transparent tender process for local and international oil exploration companies. We want actual exploration to start before the end of this year," he said.

Local and international media are already running tender adverts in a bid to entice potential investors to the southern African country.

Bids will close on 7 August at the Ministry of Mines and Mineral Development offices in Lusaka, after which evaluation will be carried out with exploration expected to commence as soon as a contract is awarded.

In June, President Rupiah Banda appointed a seven-member committee of ministers to oversee licensing, exploration and production of oil and gas in the country where copper exports are the largest foreign currency earner.

However, the fall of copper prices on the international market due to the global economic crisis has affected Zambia’s copper industry and resulted in a massive loss of over 12,000 jobs.

With the discovery of oil, Zambia is expected to once again change its fortunes and create jobs for locals as well as rake in billions from exports.

The southern African country announced the discovery of oil in 2007 after numerous tests on soil samples showed traces of oil and gas in the mineral-rich North-Western province and Eastern and Western provinces.

The country is yet to determine the size of the reserves and whether they are commercially viable.

"This is what the oil exploration companies will do. To establish how much oil is present and whether it can be explored for commercial purposes," Minister Mwale told SANF in an interview.

Zambian laws allow exploration companies to begin work within 90 days after being granted license to explore, failure of which the right can be withdrawn.

Zambia had initially imposed a ban on oil exploration activities pending a passage of a comprehensive law to define oil blocks and enable foreign firms to tender for their areas of interest.

In 2008, the country amended the Petroleum Act to provide guidance on exploration and production of oil and gas and to add clauses to attract investors in the sector.

Zambia's mining sector is currently dominated by copper and cobalt mining and the country is Africa's largest producer of the former.

According to the new law, foreign firms would be expected to train and employ locals and adhere to strict environmental, health and safety regulations. The government will also set up a state national oil firm to regulate activities in the industry.

The law grants the country’s President powers to repossess land presently held by traditional leaders and award it to a foreign investor to conduct oil exploration.

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