Rwanda oil survey stalls as talks with Chinese firm collapse

Thursday January 12 2017

Gas being extracted from Lake Kivu. Oil exploration in Rwanda has stalled after negotiations with Chinese firm BGP suddenly collapsed. PHOTO | CYRIL NDEGEYA

Gas being extracted from Lake Kivu. Oil exploration in Rwanda has stalled after negotiations with Chinese firm BGP suddenly collapsed. PHOTO | CYRIL NDEGEYA 


Oil exploration in Rwanda has stalled after negotiations with Chinese firm BGP suddenly collapsed, The EastAfrican has learnt.

The country expected to resume oil exploration in November last year when BGP — which also conducts explorations in Kenya and Tanzania — won a tender in May to explore for the “black gold” in Lake Kivu.

But sources privy to the matter confirmed that oil exploration may have to wait a bit longer after negotiations between government and BGP hit a dead end, even when a draft contract had been adopted by both parties.

The Minister of Natural Resources, Vincent Biruta, declined to explain why the negotiations collapsed, noting that the procurement process is still ongoing and that no company had won oil exploration rights in the country.

“I cannot interfere in the process or comment on companies that bid to explore oil. We will wait for the procurement process to be concluded and know who is selected. The company selected will then sign a contract; but until then I cannot comment,” Mr Biruta said.

However, documents show that the procurement process was indeed concluded and the tender to explore oil was awarded to BGP mid last year.

Thereafter, in mid July, a negotiation team led by Dr Michael Biryabarema, the former deputy general of the Geology and Mines Department, met with the manager of BGP Kenya, Feng Wenhui, and discussed the terms of the contract that would be signed between both parties.

During these talks, which lasted three days, BGP requested, among other things, the government to seek access to explore for oil across the DRC portion of Lake Kivu in order to get better data.

This request was granted later in August when both Rwanda and the DRC agreed to explore a portion of the lake within each other’s territory.

Under the contractual terms, BGP also agreed to fully fund training for up to six Rwanda staff in petroleum engineering.

It was then agreed that the BGP team would review the draft contract and return to Kigali at the end of July to officially sign it with the government — with actual exploration works set to resume by November 2016.

Since then, however, no contract between the two parties exists, with sources saying that officials at the ministry may have had a change of heart.

“Officials may intend to silently push BGP out — an act that could boil into a lawsuit against the government because the company underwent heavy costs to procure the tender,” a source said.

“The collapse of in negotiations also occurred at a time when a reshuffle happened at the ministry, whereby the team that had conducted the negotiations was changed; the new team is apparently not very keen on signing with BGP,” he added.

Attempts to get a reaction from BGP representatives in Nairobi had not succeeded by press time.

Oil prospecting in Rwanda suffered a setback in 2014 when the government and Canadian company, Vanoil Energy Ltd, terminated their partnership to search for oil in Lake Kivu.

The project, however, received a breath of fresh air when another Canadian firm, Black Swan Energy, discovered that the Eastern Kivu Basin in Rwanda is more favourable for oil and gas exploration than South Kivu.

With the discovery of oil in the Albertine Graben in Uganda — which is north of Lake Kivu — followed by gas discoveries in Tanzania and Mozambique, the East African Rift has since become a major field for exploration activities.

So far, 20 oil and gas discoveries have been made within the Rift basins, estimated to hold over 4 billion barrels, according to reports by Black Swan Energy.