Madagascar+Petroleum

=Chinese Investments in Oil Blocks 3101, 3113, and 2104 Likely to Drive Future Investments in Madagascar=

Executive Summary:
It is likely that Chinese investment in Petroleum in Madagascar will occur over the next five years. The Sino Union Energy holds two onshore oil blocks in Madagascar, the Oilfield block 3113 and block 2104. Madagascar has also seen recent investments by Da Qing to gain a 51 percent stake in block 3101 for USD 150 million.

**Discussion** The Sino Union Energy holds 100 percent stakes in block 3113 and 2104 Block 3113 is known to hold more than 270 million tons in oil reserves, while block 2104 holds 490 million tons in oil reserves and 66.24 billion cubic meters of natural gas. It is unknown how much the Sino Union Energy invested in these two oil blocks, but it is likely to be over USD 500 million. Oil block 3113 consist of 3 wells and is located in the southwestern part of Madagascar. This block is currently under evaluation for further exploration plans. Block 2104 is located in western Madagascar and consist of 5 wells. Oil and gas were discovered at 3 of these wells.

The recent investment by Da Qing to gain a 51 percent stake in oil block 3101 for USD 150 million will help develop the block to unlock the assets that are in the region. Mumbai based Varun Industries owns the other 49 percent in the block 3101 who was also excited about the joint venture with Da Qing, which will help drive the development of oil production in Madagascar.

Analytic Confidence:
Analytic confidence for this assessment is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise, worked alone, and did not use structured analytic methods. The subject is moderately complex and the deadline was easy to meet.

Analyst:
Sean Dailey sdaile35@lakers.mercyhurst.edu