Madagascar’s Tsimiroro crude oil sales to commence this quarter

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Madagascar Oil has announced it has been advised, via a “Communique de Presse: Conseil des Ministres” that the decree approving test sales of Tsimiroro crude oil in the local market was approved at a meeting of the Council of Ministers on 21 May 2014.

The decree was presented by the Minister at the Presidency in charge of Strategic Resources and a copy of the decree, issued by the Secretary General of the Government, confirming the Communique is expected to be received by the Company within the next few weeks.

It is intended that test sales of, in aggregate, between 55,000 and 73,000 barrels of Tsimiroro crude oil will commence in the second half of 2014 and will last for a period of up to six months under the terms of the current exploration licence.

This would be the first market test of crude oil produced within Madagascar, with sales due to commence after the conclusion of a tender process involving oil marketing companies currently operating in Madagascar.

“Madagascar Oil is extremely grateful to the Government of Madagascar for their ongoing support.  The comments made at the recent joint press conference involving the Minister of Strategic Resources, confirmed that our progress on the Tsimiroro Field appraisal has been achieved through a strong collaborative relationship with Government agencies. It is clear that Tsimiroro is a project of national importance and we are honoured to be working to a common purpose with the Government and people of Madagascar,” says Stewart Ahmed, Madagascar Oil S.A. General Manager.

This test is designed to establish Tsimiroro crude as a blended heavy fuel oil substitute in the local market, mainly for power generation purposes with currently stored oil volumes being initially made available for blending.

The test will also provide valuable input to development planning activities, which include sales to the local Madagascar market.  A new purpose built facility for custody transfer, blending and truck loading has been built at the Tsimiroro Steam Flood Pilot by Madagascar Oil SA for this test period.

As at 20 May 2014, cumulative oil production from the SFP, which commenced on 28 April 2013, was 90,789 barrels of oil of which 51,870 barrels of oil are stored in the Tsimiroro SFP Storage Tanks.  The remainder of the oil has been used for fuel for steam generation since the start-up of SFP operations.  Oil production rates in 2014 from the SFP have averaged 395 barrels of oil per day to the end of April 2014.

“We are very pleased to have obtained approval for the sale of test crude from Tsimiroro into the domestic Madagascar market.  Following the recent declaration of commerciality, this is another important step for the Company and is further evidence of the momentum building behind our project,”  Ahmed concluded.

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