Invictus gets government go-ahead for Cabora Bassa gas play
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Invictus has achieved a key milestone after signing a Petroleum Exploration Development and Production Agreement with the Zimbabwe government.
Importantly, the PEDPA means the company’s Cabora Bassa gas project will enjoy the benefits of having Special Economic Zone (SEZ) status that grants benefits such as zero capital gains tax, tax holiday periods and attractive 15 per cent corporate tax thereafter.
It also allows Invictus Energy (ASX:IVZ) to enter into a 25-year production licence following the exploration periods.
Cabora Bassa has the potential to host multi-trillion cubic feet of gas with current efforts focused on the Mzarabani prospect that was defined from a robust dataset acquired by Mobil in the early 1990s.
Zimbabwe President E.D. Mnangagwa said the signing of the PEDPA represented major strides in the country’s efforts to tap into its oil and gas deposits as part of its efforts to open up the economy to investment.
“We are extremely pleased to have executed the PEDPA with the Republic in Zimbabwe following extensive negotiation and collaboration with the various Ministries, government bodies and the Zimbabwe Investment Development Authority,” Invictus managing director Scott Macmillan added.
“This is a significant milestone for the project which provides the security of tenure and the confidence for the significant future investment ahead.
“The PEDPA and the provision for the creation of a Special Economic Zone for the project lays out the pathway for rapid development of the project on exploration success.”
The PEDPA provides the framework for the Cabora Bassa project to progress through the exploration, appraisal, development and production phases, the obligations and rights of each party, the minimum work program obligations to maintain the licence in good standing, and the security of tenure for the project duration.
It also puts in place an investment framework to govern Zimbabwe’s oil and gas sector.
This supports Invictus’ drive to explore Cabora Bassa, which has been independently assessed to host prospective resources of about 9.25 trillion cubic feet of gas and 294 million barrels of condensate.
Cabora Bassa was first defined by Mobil in the 1980s and early 1990s though the major declined to proceed as there was no market for gas at that time.
However, gas demand in southern Africa has skyrocketed since then, placing Invictus in prime position to benefit.
The company also recently raised $8m to fund exploration at the project.
This article was developed in collaboration with Invictus Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.