An Australia-listed company, NuEnergy Gas, has been awarded a prospecting licence by the Malawi government to explore methane gas at a site in Chikhwawa district.

Director of Mines Charles Kaphwiyo confirmed in an interview yesterday that NuEnergy Gas was awarded the licence two weeks ago to explore the viability of extracting gas commercially near Chapananga in Chikhwawa district.

"They want to explore the gas for use in the generation of thermal energy in the country, said Kaphwiyo".

NuEnergy informed the Australian Stock Exchange last week that their licence in Malawi covers a 34,600 hectare block where they will search for coal bed methane and shale gas over a period of three years.

NuEnergy Chairman Graeme Robertson said in the statement the prospect was an exciting opportunity to move forward for the company.

"Malawi has a good working environment under a newly reformed government gaining worldwide acceptance," he said.

The company said it will carry out geological and geophysical studies over the area, as well as evaluating potential resources, studying potential markets and developments and drilling if resource evaluations are positive.

The company said it will start work on the project within three months from July and has committing to spend a minimum of K62.5 million (US$233,514) every year on the project.

In its announcement, NuEnergy said the 600 metre thick coal shales of the Permian Ecca Series in the area were of particular economic interest.