ASSESSMENT OF THE OIL AND GAS PROCEEDS SHARING MODELS USED IN MALAWI BETWEEN INVESTORS AND GOVERNMENT

Production sharing contract (PSC) is an arrangement used in the upstream sector for the exploration and development of petroleum resources. Several oil producing countries, particularly the developing ones have adopted it as a contract for the exploration and development of their oil and gas resources. Malawi has adopted it for the exploration and development of the offshore and inland basin.

This paper examined the concept and general basic features of PSC. It went further to look at the PSC arrangements in Malawi and observed that there are various models of PSC executed in Malawi and identified the significant differences in each one. In addition, it reviewed the Deep Offshore and Inland Basin Production Sharing Contracts Act, 1999 which gave legislative backing to the fiscal terms granted by the Government to certain PSC models.

It evaluated the various models of PSC executed in Malawi and ascertained the shortcomings in them.

Production sharing contract (PSC) is an arrangement used in the upstream sector for the exploration and development of petroleum resources. Several oil producing countries, particularly the developing ones have adopted it as a contract for the exploration and development of their oil and gas resources. It went further to look at the PSC arrangements in Malawi and observed that there are various models of PSC executed in Malawi and identified the significant differences in each one. In addition, it reviewed the Deep Offshore and Inland Basin Production Sharing Contracts Act, 1999 which gave legislative backing to the fiscal terms granted by the Government to certain PSC models.

The research for this study is carried out in Malawi particularly on petroleum sharing agreements in upstream sector across the country in all potential petroleum production areas. Malawi's geology suggests we stand a chance of finding oil and gas reserves. Discoveries in Tanzania and Mozambique have increased interest and expectations about what may lie beneath our land and lake.

In 2009, regulations established six large blocks for exploration, and licences were subsequently awarded to some companies. The Ministry of Natural Resources, Energy and Mining granted oil exploration licences which were divided in six blocks across the country with block 1 which covers Chitipa and part of Karonga being awarded to South Africa's Sacoil Holdings, blocks 2 and 3 stretching from parts of Karonga, Rumphi, Nkhata Bay and Nkhotakota to UAE firm Hamra Oil, Rakgas MB45 got blocks 4 and 5 while Pacific Oil Limited had block 6.

Traditional authority: Lake Malawi

District: Nkhotakota

Coordinates: -13.244993, 34.342048