The government is in the process of signing a Production Sharing Agreement (PSA) with Vanoil Energy Ltd, before the next phase of oil exploration around Lake Kivu graben, commences. In an interview with The New Times, the Director General for Mines and Geology in the Ministry of Natural Resources, Dr. Michael Biryabarema revealed that Vanoil wants a long term agreement instead of the six-month agreements they had been undertaking since 2007. Vanoil has been carrying out petroleum exploration surveys since 2007 on the Lake Kivu graben, which is the South –Western extension of Albertine graben, where substantial amounts of oil have been discovered in Uganda and the Democratic Republic of Congo.“We have been working with Vanoil for the last five years, but now the contactor wants to have a good contract in place, because we have been having only a six-month technical evaluation agreement which is not appropriate for a long term project,” he said.The agreement will detail production sharing formulae and applicable taxation regime, once oil is discovered in Rwanda. In February, Vanoil carried out a marine seismic oil survey on the East Lake Kivu Graben and the final interpretation results are expected to be released in June.Biryabarema stated that, they have already sent a draft PSA to Vanoil for review and consequently send a feed back.He however pointed out that the government is in the process of developing a complete legal framework of petroleum policy and law as a means to promote exploration.“The exploration surveys costs are incurred by the contractor but once there is a discovery, it will purely recover its cost, but the challenge will be what costs are allowable to be recovered. If they don’t discover anything, it’s a loss to them, the government has no obligation at all,” he explained.Commenting on whether there is a possibility of oil presence, Biryabarema said; “I can’t tell you, we just have to be patient. Wait and see what the exploration will give us”.The exploration is being carried out on an area covering 1,600 square kilometres.A source in Vanoil who spoke to The New Times on condition of anonymity due to sensitivity of the matter, said that the company is looking to have at least a five year oil exploration deal with the government.“We have finished reconnaissance seismic stage, in the next phase we shall embark on the prospective seismic which is very crucial in oil exploration and very expensive, that is why we need a contract to secure our position in an event of discovery,” he said.“We received a draft production sharing agreement last week and now we will review it after which we shall develop a team to come and negotiate with the government.”He noted that the company has so far spent 1.2 million direct costs on oil exploration surveys since they begun the study.If oil is discovered in Kivu Graben, Rwanda will be the third country in the East African Community to discover oil deposits after Uganda and Kenya.
