In a sweeping decision that marks a new chapter in Madagascar’s upstream oil and gas policy, the government has officially terminated 21 hydrocarbon exploration and production permits as well as 21 associated production-sharing contracts (PSCs), effectively resetting parts of the nation’s oil sector framework. The move was enacted through a series of government decrees issued following a meeting of the Council of Ministers at Iavoloha Palace on 5 February 2026, signalling a deliberate shift in how Madagascar intends to manage its hydrocarbon resources.
The termination affects a large number of licences previously issued for exploration and potential development, reflecting a major recalibration of the state’s approach to resource governance. Although the official statement from the government did not provide a detailed explanation for the cancellations, the broader context and reactions point to a policy of “sector cleanup” and a desire to reposition Madagascar’s oil sector for better oversight, investment clarity and resource management.
What was terminated and why it matters
The decrees cancelled a range of hydrocarbon permits rights that had been granted to both international and domestic entities for the exploration and potential exploitation of oil and gas prospects across several blocks. Among the cancelled contracts was a production-sharing contract signed on 27 August 2015 with a U.S.-based energy firm, covering exploration activities in the Belo Profond Nord area, including multiple offshore and onshore blocks.
In addition to outright cancellations, the Office of National Mines and Strategic Industries (OMNIS) the government body responsible for managing mining and hydrocarbon contracts lost four permits that were under its direct management. A further 17 exploration titles that had reached the end of their validity period were formally declared void. The government also terminated an additional 20 PSCs signed with various international oil companies, though the authorities did not publicly disclose the full list of affected firms.
This development is significant because exploration permits and production-sharing contracts form the backbone of upstream oil and gas activity. They determine who has the right to explore, under what legal and fiscal conditions, and how revenues would be shared between the state and operators in the event of a discovery. By cancelling these agreements, the government has effectively cleared the slate, creating room to redesign its hydrocarbon framework and re-engage the sector on new terms.
Government intent and sector clean-up
While the official decrees did not explicitly spell out the reasons behind the mass terminations, the move has widely been interpreted as part of a deliberate sector clean-up strategy. This approach aims to eliminate inactive, expired or underperforming licences, reduce regulatory clutter and align the hydrocarbon sector more closely with Madagascar’s long-term economic and governance priorities.
Madagascar has long been considered to have untapped hydrocarbon potential, yet progress toward commercial production has been slow. Over the years, numerous licences were issued, but many failed to advance beyond early-stage exploration. By revoking dormant or unproductive permits, the government appears to be signalling that it wants to prioritise serious investment and tangible development over speculative holdings.
The decision also aligns with broader discussions around reforming the country’s production-sharing model. Authorities have previously explored revising fiscal terms, governance structures and contract oversight to ensure the state derives greater benefit from its natural resources while maintaining an attractive environment for investors.
The current state of Madagascar’s oil activity
Following the cancellations, Madagascar Oil S.A. remains the only operator with an active production-sharing contract in the country. The company holds full operational control over Block 3104, which contains the well-known Tsimiroro heavy oil deposit, one of Madagascar’s most advanced hydrocarbon prospects.
The continued operation of this project suggests that the government may be focusing its attention on assets deemed commercially viable or strategically important. Madagascar Oil has historically positioned its operations around supplying domestic energy needs and developing local infrastructure, which may align more closely with national priorities than purely speculative exploration.
By narrowing the field of active operators, authorities could concentrate regulatory oversight and technical support on projects with a realistic path to development, rather than spreading limited resources across numerous inactive licences.
Implications for investors and the energy sector
The cancellation of 21 oil permits and 21 production-sharing contracts sends a strong signal to the market and carries several implications:
For the government, it represents an assertion of sovereignty over natural resources and a commitment to improving governance and accountability in the extractive sector. For investors, the move introduces both opportunity and caution. On one hand, a cleaner, more transparent licensing environment could attract new entrants willing to engage under updated rules. On the other, the retroactive termination of contracts may raise concerns about regulatory stability and contract security.
Industry observers note that how Madagascar proceeds from here will be critical. Clear communication, predictable licensing processes and competitive fiscal terms will be essential if the country hopes to rebuild investor confidence while maintaining firm control over its hydrocarbon assets.
A turning point for Madagascar’s oil sector
The government’s decision to end dozens of oil permits and production-sharing contracts marks a turning point for Madagascar’s hydrocarbon sector. It reflects a break from past practices and an effort to lay the groundwork for a more focused, transparent and results-driven oil and gas industry.
As policymakers move toward redefining the country’s upstream strategy, the effectiveness of this reset will ultimately be judged by whether it leads to renewed exploration interest, tangible development and long-term economic benefits for Madagascar. The coming months will reveal whether this bold intervention becomes the foundation for sustainable progress or a cautionary tale in resource governance.