Madagascar Development

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Total, the French oil company, on Wednesday continued its acquisition spree of oil fields, venturing into Madagascar in a deal that could eventually become the island nation’s biggest investment. Total bought 60 per cent of the Bemolanga field from Madagascar Oil, a small Houston-based company, that acquired the licence for the field in western Madagascar in 2004. Neither company disclosed the value of the deal, but analysts estimate the mining project to cost $5bn. A plant to upgrade the viscous oil trapped in the clay just below the surface would cost another $5bn-$7bn. The oil – estimated to be eventually 180,000 barrels a day – is most likely to go to China, which has been aggressively seeking to secure fresh streams of supply. Total has about 30 years experience of operations in China. Total has four years to develop the technology to extract the oil and overcome the massive soil erosion that washes away roads and makes part of Madagascar unreachable for the six months of the rain

Madagascar Oil Ltd. is teaming up with Total SA to develop huge oil reserves in the island nation of Madagascar. Madagascar, a Houston-based private E&P company, holds the largest onshore licensed acreage on the island, which lies off the east coast of Africa. Under the terms of the deal, French supermajor Total (NYSE: TOT) gets a 60 percent interest and the operating license to the Bemolanga oil sands, believed to be one of the largest undeveloped bitumen reserves in the world, with more than 16 billion barrels of oil, according to an independent survey. “Total’s experience in other oil sands projects and large-scale integrated developments worldwide will greatly benefit the project and position it forward for potential development,” said Madagascar Chief Executive Officer Alex Archila. Financial terms of the deal were not disclosed. The Bemolanga license is one of six that Madagascar and its subsidiaries, Madagascar Oil SA and Majunga Oil SARL, holds on the island. Houston Busine