Announcement of IDA Approves Eleven Million Fifty Thousand US Dollars Credit for Heavy Oil Exploration in Madagascar on December 28, 1982

FOR IMMEDIATE RELEASE •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-'1234 IDA NEWS RELEASE 83/20 (re-issued) Contact: Pushpa Schwartz December 28, 1982 (202) 477-5306 IDA APPROVES $11.5 MILLION CREDIT FOR HEAVY OIL EXPLORATION IN MADAGASCAR A credit of SDR 10.7 million ($11.5 million) will help support Madagascar's efforts to establish the feasibility of exploiting a heavy oil deposit, the International Development Association (IDA) announced today. The IDA credit will provide funds for gathering dat.a on the Tsimiroro deposit to attract investment from private oil companies thereafter. The project area lies about 300 kilometers west of the capital and 150 kilometers from the western coast of Madagascar. The Tsimiroro deposit has proven reserves of about 4.8 billion barrels of oil in place. Ten wells will be drilled and tested to identify those areas which have the potential for exploitation. The initial drilling program will be carried out in the dry season of 1983 (May to November). All drilling will be conducted according to • industry-accepted safety procedures • Two studies are included in the $18 million project which is co- financed with a $5 million loan from the OPEC Fund. An engineering study for a future pilot plant at Tsimiroro and a related study on the feasibility of upgrading heavy oil would follow if the exploratory drilling is successful. The results of these studies will be part of the information package sold to interested oil companies. Training abroad/ for 12 professionals of 'the Office Militaire National pour les Industries St.i"ategiques (OMNIS), the implementing agency, will also be financed under the project. Madagascar, with a per capita gross national product of $330 in 1980, is among the poorest countries in the world. From 1977 to 1980 the country's import bill nearly doubled while export earnings increased by only around 3 percent. 0{1 imports represent a growing burden on Madagascar's balance of' 1 payments. The IDA credit of $11.5 million is for 50 years, including 10 years of grace; it carries no interest but bears a small annual service charge (0.5% on the undisbursed balances of the credit and 0.75% on the disbursed balances~ IDA participated with eight other co-lenders in the financing of the large Andekaleka hydroelectric project, which was successfully completed in June 1982. The project will meet the growth in electricity demand up to 1992 in the Antananarivo area. In May 1980, a $12.5 million IDA credit for petroleum exploration promotion was approved to support the government's • efforts to develop a domestic supply of hydrocarbons and improve planni.ng of the energy sector. NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a ''basket" of ~urrencies. The U.S. dollar eq utvalent of the SDR amount of the IDA cr't:.~4it reflects the exchange rates existing at the time of negotiation the credit.gt