Rwanda passes law on petroleum

Saturday June 11 2016

Rwanda has passed its maiden national petroleum

Rwanda has passed its maiden national petroleum law to revitalise investments and exploration in oil, as it seeks to share regional oil production prospects. ILLUSTRATION | JOHN NYAGAH | NATION MEDIA GROUP

By Ivan R. Mugisha

Rwanda has passed its maiden national petroleum law to revitalise investments and exploration in oil, as it seeks to share regional oil production prospects.

The new law has similarities with petroleum laws in Kenya and Uganda, which confirmed discoveries of oil. Rwanda seeks to avoid amending the law once oil is also discovered on its territory.

Oil exploration in Rwanda was initially conducted by Vanoil, a Canadian firm which explored the northern part of Lake Kivu for six years.

The company pulled out of the contract with government in 2013 after hitting a few “dry wells” and incurring heavy costs in the due course, according to sources.

However, government maintains that the company’s prospecting pace and capacity did not match expectations, which led to cancelation of the contract.

Three years after Vanoil’s exit, a new private oil explorer is expected to restart drilling the sediment rocks of Lake Kivu by the start of next year, as the country seeks to become the fourth country with known oil reserves in the East African Community.

“No investment company is currently dealing in exploration of oil in Rwanda. What we have now is a government project exploring for seismic data on Lake Kivu, mostly in the northern part,” said Evode Imena, state minister for mines.

“We identified features describing a possible petroleum basin, but nothing is conclusive yet. We have six private companies bidding for exploration activities and are hopeful that with the new petroleum law in place, a qualified company will begin works next year.”

The minister further disclosed that Vanoil left behind important exploration data which points to potential petroleum basins in Lake Kivu.

“We are optimistic. We can never be sure before drilling and getting oil in our hands, but information we have so far shows that there is a good chance,” he said.

“We are evaluating proposals from six exploration companies specialising in seismic shooting and data interpretation. So far no contract has been signed yet and our team is working on finding out the best proposal.”

Under the Rwandan law governing petroleum exploration and production activities, an exploration licence is valid for three years while a production investor is given a licence valid for up to 25 years.

However, all rights of ownership and control of petroleum production remain vested only in the state.

Kenya was greeted with good news earlier in March when British energy group Tullow Oil announced new oil discoveries in northern Kerio Valley, while Uganda boasts possession of Africa’s fourth-largest crude oil reserve.

South Sudan — EAC’s newest entrant — is known to be the world’s most oil dependent country.

There are no known reserves in Burundi and Tanzania. Tanzania however has natural gas reserves, and in February this year, the government announced larger reserves of 2.17 trillion cubic feet of natural gas reserves discovered in the southern coast.