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By Shapi Shacinda

LUSAKA, Jan 11 (Reuters)

Zambia said on Friday it had discovered more oil and gas reserves and had set up a petroleum committee to outline regulations for foreign investors.

President Levy Mwanawasa said the government would also award a 30 percent stake to a foreign equity partner Zambia’s only refinery, Indeni.

Mwanawasa said soil samples from eastern Zambia had shown the existence of oil and that other samples from the western parts also showed encouraging results for oil and gas.

Zambia first announced oil in its northwestern province in early 2007.

“Further investigations were extended to the eastern province in 2007 where 153 soil samples were collected (and) whose laboratory results are very encouraging,” Mwanawasa said in an address to parliament.

Mwanawasa said the government will create a separate regulatory framework for oil exploration and production for foreign investors who would have to obtain different licences for the two undertakings.

“As a result, the government has suspended the process of invitation to tender until the Act (legislation) is repealed and replaced. A new Bill is expected to be tabled in (parliament) within the first quarter of this year,” Mwanawasa said.

The government had planned to call for bids early this year for foreign companies to start major exploration work.

He said the current law had weak provisions for the exploration and production of oil and also on environmental protection and that these would be strengthened in the revised legislation.

Mwanawasa said he had already appointed a petroleum committee to oversee the development of the oil sector.

“The committee is already spearheading formulation of policies and guidelines relating to petroleum and its development in Zambia,” Mwanawasa said.

Mwanawasa said Zambia will invite a third equity partner in the Indeni Oil Refinery, which it jointly owns with French oil major, Total (TOTF.PA: Quote, Profile, Research), on a 50-50 basis.

“The government and the oil company, Total, who are the two shareholders in Indeni have agreed to invite a third shareholder to take up 30 percent of the shares. The process will commence in the first quarter of this year,” he said but gave no further details.

The move was aimed at attracting fresh capital investment in Indeni Oil Refinery and revamp its operations, Mwanawsa said. (Reporting By Shapi Shacinda)

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LUSAKA, November (28) – A unit of South Africa’s Standard Bank has tendered to finance a $1.07 billion crude oil feedstock purchase deal for mineral-rich Zambia, a senior government official said on Wednesday.

Energy and Water Development acting permanent secretary, Oscar Kalumiana, said Stanbic Bank Zambia Plc and Finance Bank Ltd., another local bank were competing for a two-year financing contract for Zambia’s 1.4 million tonnes crude oil requirements.

Zambia, which has faced intermittent fuel shortages due to problems in procuring crude oil for its vast copper and cobalt mines and other sectors of the economy will announce the successful bank by mid-December, Kalumiana said.

“The two banks submitted technical financial proposals through the Zambia National Tender Board (ZNTB). We are evaluating the proposals and will select one of them before mid-December,” Kalumiana told journalists from state media.

Officials say the government is currently scrutinizing tender documents for five foreign oil trading firms which want to start procuring oil for the country.

Kalumiana said the government had requested local banks to participate in the financing to pay for the feedstock supplied in order to access funds quicker, especially for upfront costs.

“It (oil deal financing) will be a revolving facility with each shipment to last one and a half months at $67 million per oil shipment at current prices and we need eight shipments in a year. The banks have other charges and their bids will be graded depending on who has the best structure,” Kalumiana added.

He said Zambia and French oil major Total, which are equal shareholders of the country’s sole Indeni Oil Refinery, had agreed to get a local bank to finance the purchase of oil.

“We agreed with Total that instead of the two shareholders providing the money, we should let the money come from the private sector because the business is profitable. The local banks will be getting their money (after) the fuel is sold,” Kalumiana said.

In October, Zambia — which uses huge amounts of diesel to run its vast copper mines, the country’s economic lifeblood, and other industries — faced severe fuel shortages after Total stopped crude oil imports for the country over a pricing dispute.

Commoditex International of the United Kingdom, Russia’s Lukoil International Trading and Supply Company, Trafigura of Italy, Addax and Oryx Group of France and Independent Petroleum Group of Kuwait are the firms that tendered to procure oil for Zambia.

According to ZNTB data, the oil traders have submitted bids with prices ranging from $65.69 per tonne for crude oil from Iran to $76.15 per tonne of Oman.

Officials say the government turned to local banks for financing after Citi Bank of the United States in October declined to provide financing for crude oil Zambia wanted to purchase from Iran due to an embargo for U.S firms against dealing with Iran.