Madagascar recently terminated 21 hydrocarbon exploration and production permits and 21 production-sharing contracts following decrees adopted at a Council of Ministers meeting on February 5 at Iavoloha Palace, effectively resetting large parts of its upstream oil framework and leaving Madagascar Oil SA as the sole operator with an active production-sharing agreement.
The measures include the cancellation of a 2015 production-sharing contract with CB World Trade Natural Energy Ltd covering the Belo Profond Nord area, as well as the withdrawal of four exploration and production permits from the Office of National Mines and Strategic Industries. Seventeen expired titles were formally declared void. An additional 20 production-sharing contracts with international oil companies were also terminated, although the authorities did not name the companies concerned or detail the grounds for the decision.
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The absence of an official explanation has led local media to describe the move as part of a broader sector restructuring. Earlier statements by government officials indicated an intention to overhaul the upstream framework, including the introduction of a revised model production-sharing contract and the clearance of inactive or lapsed acreage ahead of a possible new promotion campaign.
Madagascar’s oil industry has struggled to translate geological promise into sustained production. The Tsimiroro block, operated by Madagascar Oil SA, is estimated to contain around 1.7 billion barrels of heavy oil resources. Past announcements linked the project to domestic supply agreements for heavy fuel oil in agribusiness and textile manufacturing, illustrating the potential connection between upstream activity and industrial demand. However, commercial scale development has remained limited, reflecting infrastructure constraints and financing challenges typical of frontier basins.
Clearing dormant permits may improve transparency over which blocks are genuinely available for investment. In many African jurisdictions, overlapping or inactive licences have complicated bidding rounds and weakened regulatory oversight. By formally extinguishing expired and non-performing contracts, the authorities appear to be seeking a more coherent licensing map before approaching new partners.
The broader context is a shifting investment landscape. Capital allocation to frontier oil exploration has become more selective as companies prioritise lower-cost, lower-risk assets and as climate-related disclosure requirements tighten globally. According to industry analysts, countries seeking to attract upstream capital increasingly compete on fiscal stability, contractual clarity and infrastructure readiness rather than resource potential alone.
For a low-income island economy with constrained fiscal space, hydrocarbons have long been seen as a prospective source of export earnings and public revenue. Yet reliance on undeveloped reserves also carries opportunity costs, particularly when administrative capacity is absorbed by managing inactive contracts. The current reset therefore has implications beyond the energy sector, touching on governance credibility, revenue forecasting and investor confidence.
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