Madagascar - Petroleum Crude ProductionMadagascar - Petroleum Production

Overview                                                                                        

With the recent discovery of large natural gas deposits off the coast of Mozambique, Madagascar, just across the Mozambique Channel, has received much interest in the last few years as a potential source of natural gas and petroleum.  Madagascar Oil, an AIM listed company, has been producing heavy oil since 2013 from its field in northwest Madagascar and in April 2014 became the first oil company in the country to receive a 25-year exploitation license.  About a dozen other international oil companies are currently exploring in Madagascar both on-shore and off-shore, and a number of them plan to commence exploratory drilling in the next year.

Sub-Sector Best Prospects                                                            

Petroleum Pipelines, Crude
 
Given that Madagascar is projected to become an oil producer in the medium to long term, U.S. businesses have an opportunity for entering the market in the petroleum pipe supply chain.  Madagascar Oil, a London-listed company, has recently been granted its exploitation permit and will soon begin development of its facilities, to include an eventual pipeline.  Currently, France dominates this nascent market.
 
The U.S. represented 28% of overall imports in this sector in 2012, at a value of approximately USD 714,000, but has been losing market share since 2013, despite a clear and significant demand in 2014.  

Units USD thousands

Total Market Size= (Total Local Production + Total Imports) - (Total Exports)
Data Sources:

Products covered are within HTS Chapters 730411, 730419, 730420, 730421, 730422, 730423,730424, 730429, 730511,730512, 730519, 730520, 730531, 730539, 730590, 730610, 730611, 730619, 730621, 730629 which are pipes used for transporting gas and for extracting fuel. 
 
Support Activities for Oil and Gas Operations
 
This industry comprises enterprises primarily engaged in performing support activities on a contract or fee basis for oil and gas operations (except site preparation and related construction activities).  Services include exploration (except geophysical surveying and mapping); excavating slush pits and cellars, well surveying; running, cutting, and pulling casings, tubes, and rods; cementing wells, shooting wells; perforating well casings; acidizing and chemically treating wells; and cleaning out, bailing, and swabbing wells.
 
Given the increased exploration activities of international oil companies in Madagascar in recent years, and the potential for further growth following completion of a new petroleum code expected this year and upcoming bid rounds for new exploration blocks, support activities for oil and gas operations would be much needed both for on-shore or off-shore oil exploration.  In the medium to long term, these services would be needed for exploitation as well.

Opportunities                                                                                

The government is currently in the process of revising its petroleum legislation in order to render it more attractive to foreign investors.  It has consulted the private sector and has also received advice from the World Bank regarding international best practices in the petroleum industry.  The government’s objective is to finalize the new petroleum code this year.  Later in the year, the government hopes to begin bid rounds for its remaining two hundred plus oil blocks.  Increased exploration activities will present opportunities not only for American investors in the petroleum industry, but also for American exporters of the associated equipment and services.

Resources                                                                           

For additional information on investment and export opportunities in the petroleum sector, potential investors and exporters can contact the Ministry of Commerce, the Ministry of Mines and Petroleum, OMNIS, EDBM, the American Chamber of Commerce, or other business associations (see Chapter 9).  Please also do not hesitate to contact the Embassy’s Political-Economic Section for more information.