Play by Play: Lake Malawi

East Africa has been relatively neglected up to now, and few areas have been as overlooked as Lake Malawi. Geologically the area is relatively young, especially compared to other basins in the East African Rift System, and therefore less attractive.

In the 1970s, a study by the Institute of Geological Sciences of Great Britain found little potential for hydrocarbon accumulations in the area. Further studies indicated similar results. Shell explored Lake Malawi and the Lower Shire Valley through an aeromagnetic survey in 1981, but the location of sedimentary rocks in the deepest parts of the lake (in excess of 500 meters depth) made exploration uneconomical. Additionally, portions of Lake Malawi are under dispute with Tanzania, where it is known as Lake Nyasa. It also shares a border with Mozambique.

Faced with receding revenues from agriculture and few options for economic diversification, the Malawi government has recently been pushing for exploration of its mineral and hydrocarbons potential.

In 2011, the Malawi government awarded exploratory blocks to UK-based Surestream. Surestream was awarded Blocks 2 and 3, covering an area of 20,000 square kilometers. The company performed environmental and social impact studies, but did not advance with actual exploration before it sold its acreage to Hamra Oil in 2013. Hamra has been more active, performing airborne gravity, magnetic and full tensor gravity surveys with results indicating potential hydrocarbon accumulations, particularly in the deepest areas of the lake. Unfortunately for investors, the potential discoveries are close to the disputed Tanzanian border.

Malawi’s territory in Lake Malawi is divided into six blocks. Besides the two held by Hamra, Block 1 is held by South Africa-based SacOil Holdings; Block 4 and 5 are held by Emirati company RAKGAS; and Block 6 is held by Ghana-based Pacific Oil and Gas.

On the Tanzanian side of the lake, massive offshore gas-discoveries to the east and oil potential in Lake Tanganyika keep attention away from Lake Malawi. However, two companies have moved in on the two areas earmarked for oil and gas exploration. Heritage Oil, partly responsible for the discoveries in Uganda’s Lake Albert, was awarded in 2012 a 100 percent ownership of the Kyela Basin Block. Heritage acquired 1,500 square kilometers of high resolution gravity surveys, followed by a 100-kilometer reconnaissance 2D seismic survey. The company has yet to start drilling, but it has publicly stated that it believes the geological similarities between the area and Lake Albert’s hydrocarbon formations are very promising.

Finally, a small Australian company, Jacka Resources, holds a 100 percent interest in the Ruhuhu License. Covering 10,343 kilometers and running from the lake’s eastern shore to inland, the area is believed to have potential for conventional and unconventional oil, gas and associated liquids reserves of up to 3.6 billion barrels, according to the company. Jacka is still trying to attract investors, and is considering relinquishing the acreage.

Mozambique has earmarked five blocks for exploration on its side of Lake Malawi, but none have been awarded. This is unlikely to change in the near future, as efforts are focused on the massive natural gas reserves found offshore. Further south into Mozambican territory, at the border with Zimbabwe, Lake Cahora Bassa, the most southern of the rift lakes, faces a similar problem, with 11 blocks earmarked for exploration, but none having been awarded.