Madagascar Oil declares force majeure

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 29 -- Madagascar Oil, Houston, said it has declared force majeure under the four production-sharing contracts for Blocks 3104, 3105, 3106, and 3107 that it operates in Madagascar in order to safeguard its rights under those agreements.

“We hope that the force majeure declaration will convince the government parties to enter into meaningful discussions with Madagascar Oil,” said Madagascar Chief Executive Officer Laurie Hunter.

The company said the declaration of force majeure comes in response to the stated threat of expropriation made by the minister of mines and hydrocarbons and the failure by the Ministry of Mines and Hydrocarbons to instruct the state regulatory authority to proceed with initiating the approval process for Madagascar’s 2011 work programs.

“These acts have left Madagascar Oil unable to continue to perform under its PSCs,” Madagascar said.

Madagascar Oil also said that it has made “repeated attempts” at removing the impediments created by the threats of expropriation and the failure to schedule a contractually required meeting for the purpose of approving the company’s 2011 work programs under the PSCs.

“The declaration of force majeure comes only after the Ministry of Mines and Hydrocarbons has persistently refused to engage with the company in its efforts meet to resolve these matters,” the firm said.

Madagascar Oil said it is “entirely confident” that it has complied fully with all PSC obligations and has provided extensive documentation to the ministry regarding activity on all of the blocks.

The firm added that to date the ministry has provided “no findings from the audit of the Tsimiroro Block announced in January of this year.”

Madagascar Oil said it does not view the force majeure declaration as an act of hostility. Instead, it said that the declaration serves to place the contract terms on hold while the delaying events introduced by the ministry are resolved.

According to the influential newsletter Africa Confidential, the government was interested in acquiring the oil concessions, particularly Tsimiroro, for a joint-venture with a Hong-Kong based China International Fund called the Madagascar Development Corp., launched last December.

Contact Eric Watkins at

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