Madagascar - Petroleum and Heavy Oil Exploration Promotion Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 11452 PROJECT COMPLETION REPORT MADAGASCAR PETROLEUM EXPLORATION PROMOTION PROJECT (CREDIT 1016-MAG) AND TSIMIRORO HEAVY OIL EXPLORATION PROJECT (CREDIT 1298-MAG) DECEMBER 21, 1992 Industry and Energy Operations Division South-Central and Indian Ocean Department Africa Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ABBREVIATIONS AND ACRONYMS BEICIP Bureau d'Etudes Industrielles et de Coop6ration de l'Institut Francais du P6trole BHP. Petroleum Broken Hill Proprietaries. Petroleum BRGM Bureau de Recherches G6ologiques et Mini4res EIB European Investment Bank GNP Gross National Product GSI Geophysical Service International OMNIS Office Militaire National pour les Industries Strat6giques OPEC Organization of Petroleum Exporting Countries OROIP Original Recoverable Oil in Place PCIAC Petro Canada International Finance Corporation  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation December 21, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Madagascar Petroleum Exploration Promotion Project (Credit 1016-MAG) and Tsimiroro Heavy Oil Exploration Proiect (Credit 1298-MAG) Attached is a copy of the report entitled "Project Completion Report on Madagascar - Petroleum Exploration Promotion Project (Credit 1016-MAG) and Tsimiroro Heavy Oil Exploration Project (Credit 1298-MAG)" prepared by the Africa Regional Office with Part II contributed by the Borrower. The overall objective of both projects was to improve Madagascar's energy self-reliance. The avenues supported by the Bank (petroleum exploration and oil shale tests) were inherently risky; no petroleum was found and the expected heavy oil proved not to be commercial. Nevertheless, the projects achieved the technical objectives of attracting foreign oil companies (over US$350 million expended on exploration), and of testing the feasibility of producing heavy oil, respectively. In addition, the projects contributed to the adoption and later revision of the Petroleum Code, the financing of an energy planning study, the purchase of equipment (mainly transportation), construction of office and storage buildings, and training. Accordingly, the outcome of both projects is rated as satisfactory their institutional impact as substantial and their sustainability as likely. While acknowledging the good relations experienced with IDA, the borrower's contribution to the PCR notes the lack of familiarity with IDA procedures of the implementation agency and the skill mix discontinuities of IDA supervision. An audit is planned. This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   FOR OMCIAI USE ONLY PROJECT COMPLETION REPORT MADAGASCAR PETROLEUM EXPLORATION PROMOTION PROJECT (CREDIT 1016-MAG) TSIMIRORO HEAVY OIL EXPLORATION PROJECT (CREDIT 1298-MAG TABLE OF CONTENTS Pamt. No. Preface . ........................................................ l Evaluation Summary .............................................. ii PAR T I PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. PROJECT IDENTITY ................................-. 1 2. BACKGROUND .......... ............................... 1 3. PROJECT DESCRIPTION ................................. 2 4. PROJECT IMPLEMENTATION ............................. 3 A. First Round of Petroleum Exploration Promotion ...... 3 B. Tsimiroro Heavy Oil Exploration ................... . 5 C. Second Round of Exploration Promotion ............... 8 D. Other Components of the Project . .................... 11 -Energy Planning Study . . 11 - Equipment ........................................ 12 - Training ......................................... 12 - OMNIS Reorganization ............................. 14 - Seismic Tape Storage . . 14 5. COMMENTS ON THE IMPLEMENTATION OF THE PROJECT ....... . 14 - Financial Aspects .......................... - 14 - Costs and Disbursements ........................ 14 - Variances between Planned and Actual Project Implementation ..................-.-.--...... 15 - Audits ....................... 16 - Performance of the Borrower .......... .......... 16 - Performance of the Bank ...... .................. 16 - Performance of Consultants and Contractors ..... 17 6. CONCLUSION ................................ 17 This document has a restricted distribution and may be used by recipients only in the performance | of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  TABLE OF CONTENTS (Cont.) Page No. PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 1. PERFORMANCE OF THE BORROWER ........................... 19 2. BANK PERFORMANCE ...................................... 19 3. PERFORMANCE OF CONSULTANTS AND CONTRACTORS ............ 20 PART III STATISTICAL INFORMATION .. 21 1. Projects Timetable ................................... 21 2. Cumulative Estimated Cost and Actual Disbursementa... 23 3. Project Implementation ............................... 24 - Key Indicators 4. Project Costs and Financing . . 26 A. Project Cost .................................... 26 B. Project Financing ................................ 28 5. Projects Results .. 29 A. Direct Benefits ................................... 29 B. Economic Impact ................................... 29 C. Studies ........................................... 30 6. Status of Covenants-. ----------------------------- 31 7. Use of Bank Resources .. 32 A. Staff Inputs ...................................... 32 B. Missions .......................................... 33 ANNEX Comments from OMNIS ................................................ 36