Madagascar - Tsimiroro Heavy Oil Exploration Project

Document of The World Bank C: FOR OFFICIAL USE ONLY /129&-MR C- Report No. P-3204-MAG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT EQUIVALENT TO US$11.5 MILLION TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR THE TSIMIRORO HEAVY OIL EXPLORATION PROJECT October 20, 1982 This document has a restricted distribution and may be used by recipients only in the performuace of I their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS December 1981 June 1982 Unit = Malagasy Franc (FMG) = Malagasy Franc (FMG) US$1.00 = FMG 278 = FMG 375 FMG 1,000 = US$3.59 - US$2.67 FMG 1,000,000 = US$3,590 = US$2,670 (The cost estimates are based on US$1 = FMG 375) WEIGHTS AND MEASURES GWh = Gigawatt hour kWh = kilowatt hour MW = Megawatt RD = Barrels per day GLOSSARY OF ABBREVIATIONS OMNIS - Office Militaire National pour les Industries Strategiques EIB - European Investment Bank GOVERNMENT OF MADAGASCAR FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY MADAGASCAR TSIMIRORO HEAVY OIL EXPLORATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Democratic Republic of Madagascar Beneficiary: Office Militaire National pour les Industries Strategiques (OMNIS) t Amount: SDR 10.7 million (US$11.5 million equivalent) Terms: Standard Onlending Terms: The Government would make the proceeds of the credit available to OMNIS as a grant. Project Description: (i) Objective: The project would support the Government's efforts to evaluate the country's hydrocarbon potential with the objective of realizing domestic oil production in the future. (ii) Main Project Components: (a) exploration of the Tsimiroro heavy oil deposit through a 10-well exploratory drilling program to determine the characteristics of the deposit; (b) engineering study of a pilot plant at Tsimiroro for testing production of the heavy oil under enhanced recovery techniques, such as steam flooding (40 man-months of consultant services); (c) feasibility study of upgrading the heavy oil recovered from Tsimiroro, including selection of an appropriate upgrading process (13 man- months of consultant services); (d) training abroad of about 12 professionals for about six months each. This document has a restricted distribution and may be uscd by recipients only in the performance of | their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - (iii) Benefits: The project would establish whether the characteristics of the Tsimiroro deposit warrant the installation of pilot facilities to test production under enhanced recovery techniques, a necessary stage before determining the commercial viability of the deposit. If such facilities are justified, the engineering and upgrading studies would provide the basis for planning the pilot stage. The training component would help OMNIS to improve further its competence in petroleum activities. (iv) Risks: There is a risk that the results of the exploratory drilling for the Tsimiroro heavy oil would show that further work toward development of the deposit is not warranted. Given that this project is only the first step towards the potential development of the deposit, this must be considered a high risk project. However, in view of Madagascar's present dependence on oil and the existing information on these deposits, the risks are acceptable. Foreign Local Total