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Is This "Lost Nation" The Next Big Oil Opportunity?

We saw an interesting confluence of announcements the last two weeks. With a number of countries announcing potentially important reforms on licensing and permitting of resource projects.

These are the kind of changes that can make a big difference to new projects. Perhaps opening up whole districts to exploration and development--for a number of commodities.

Indonesia, for example, said this week it will move to simplify licensing for the mining sector. Reducing the number of permits required for miners in the country--and making overall operations more efficient.

Related: All Eyes On Kenya: The Next Big Oil Exporter

But the biggest move came from the other side of the Indian Ocean. In Madagascar.

The East African nation announced that it is preparing a new petroleum law--which is planned to open the door for a major oil and gas licensing round next year.

The country's Director General of Hydrocarbons, Pascal Velonarivo, told an industry conference in Kenya that Madagascar plans to make the bid round a big one. Offering up to 50 offshore blocks, as well as 3 onshore licenses. The country currently has 24 blocks under license to firms including ExxonMobil.

This could create some intriguing opportunities. Given that Madagascar lies at the southern end of an East African petroleum system that is proving to be very productive in places like Tanzania.

Related: Africa and Belgium Generate the Same Amount of Electricity – But That’s Changing

So far, discoveries in Madagascar have been more oil-prone. But if charging here is anything akin to the trillions of cubic feet of gas so far discovered by Tanzanian explorers, Madagascar could offer some significant targets--whatever the end product is.

The play is all the more interesting given that Madagascar has effectively been closed to exploration while the East Africa play has been taking off the last few years. The 2009 coup here led most players in the petroleum sector to suspend operations. With groups like Exxon only recently having reactivated their permits.

This could thus be some of the last virgin acreage in this up-and-coming terrain. Watch for details on blocks being offered, likely during the second half of 2015.

Here's to opening up,
Dave Forest

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