This sample oil and gas exploration and production business plan can be used for grant applications, bank loans, proposal writing, business concept notes and as a roadmap to achieve your business objectives.

Also, you crucially need the guidance of a specialist petroleum industry consultant in Tanzania, such as Hussein Boffu, to help you in implementing this business plan.

Executive Summary

In recent years, due to economic recovery, Tanzania has registered significant growth in the demand for gas. Moreover, increased gas-to-power initiatives, increased industrialization and continued economic activities in the region require growth in gas-delivered volume for supporting economic expansion. Glass supply is so inadequate that current small gas-producing fields can’t cover the growth demand for all power consumers and industrial users. Moreover, the approach used to meet the increased gas demand elsewhere in the world is to encourage and attracting exploration and production companies through bidding around.

Rich Energy Exploration and Production Tanzania Limited is positioned to capitalize on these growing opportunities, that the Tanzanian oil and gas market hold, by playing vital roles in developing a new source of gas supply to ensure the availability of enough gas for power generation, industrial and households use.

The founding team has over 60 years’ experience in aspects of the energy industry including engineering, managerial, researching and marketing. The company will be established on 29th October 2020 to explore, develop and produce natural gas for industrial users and power stations in Tanzania.

Rich Energy Exploration and Production Tanzania Limited expects that approximately 40.4 billion in gas sales will be created annually.

Our vision

To facilitate industrial and commercial development, job creation, and economic growth through development of indigenous natural gas sector.

The mission

Our mission is to be the top performer in our industry in order to enhance the value of our shareholders. We will utilize the team work of our people and appropriate technology to provide our customers with high-quality products competitive in price.

Objectives

• To provide competitive total shareholders’ return in top 25 percent in the industry.
• Maintain our financial flexibility and consistently fund our capital program.
• Achieve and maintain the highest standards of safety, ethics, total quality and environmental performance in all operations.
• Improve competitive performance through a more effective utilization of technology.
• Build employee commitment and loyalty through communication and creation of opportunities.
• Satisfy customer requirement through continuous quality improvement.
• Operate our business in efficient, low cost, high quality manner, maintaining high standards of ethics, safety and environment compliance.

Key to Success

• Add commercial reserves by drilling at low cost reserves relative to competition.
• Produce oil and gas resources at high margin relative to the competition.
• Add commercial reserves by acquiring assets at low cost relative to the competition.

The Management

Chief Executive Officer: Adam Smith has over 30 years’ experience with specialized technical, operational and managerial abilities focused on critical aspect of the energy sector industry including engineering, operating, research and marketing abilities having worked at the managing director level with Shell, Equinor etc.

Financial Engineer: Chriss Mkema Innocent is a financial engineer with deep operating experience, great negotiation skills and a knack for numbers and deal-making.

Operation Manager: Abdallah Igengu is a reservoir and petroleum engineer with 32 years’ experience in the upstream oil and gas industry in different countries. He has a Bachelor of Science in Petroleum Engineering and an MBA from Madonna University, USA.

Legal Advisor: Anganile Anyeliswe.

Petroleum Consultant: Hussein Boffu

Board of Directors: Rich Energy Exploration and Production Tanzania Limited is controlled through its Board of Directors. The board will consist four members and comprises non-executive directors. The Board’s main roles are to create value for shareholders, to provide entrepreneurial leadership to the Group, to approve the Group’s strategic objectives and to ensure that the necessary financial and other resources are made available to enable the Group to meet its objectives.

Products and Services

Rich Energy Exploration and Production Tanzania Limited will be selling natural gas to industrial customers such as factories, hotels and power generation customers such power stations and government agencies including state-owned utility company, TANESCO, and state-owned national oil company, Tanzania Petroleum Development Corporation (TPDC).

Market Analysis

Tanzania is arguably the most exciting oil exploration region in the world. But it still is the most untapped region. As at the time of this writing, exploration activities confirmed reserves of 57.54 trillion cubic feet of natural gas in Tanzania, and more than 441 trillion cubic feet of natural gas are still trapped underground, solely in the coastal region, according to the US Geological Survey. So, discoveries might be forthcoming. This is why giants like Royal Dutch Shell, Equinor, Total and Pavilion Energy are buzzing around Tanzania like bees do to honey. The big boys won’t lift a finger if there’s no chance big profits could be made. Furthermore, with continued economic growth in Tanzania will come an increased gas demand. These signs indicate that the future for the oil and gas exploration activity is really bright.

Trends

There has been a change in the dynamic of oil and gas exploration and development in Tanzania, driven by the 2014-2016 oil price slump which reflects the global oil and gas industry downturn. The region has also seen takeovers and mergers amongst operating companies. Most noticeable of these were that Royal Dutch Shell acquired BG Group for US $50 million (the takeover gave Shell 60% of BG’s block 1 and block 4 offshore Tanzania in February 2016) and the Indonesian company, Medco Energi’s $539m acquisition of Ophir Energy in May 2019.

Competition

There have been significant onshore and offshore discoveries of gas in the last ten years and it is expected that the development of these discoveries will increase competition in the future.

Pan African Energy Tanzania (PAET), a subsidiary of Orca Exploration Group Inc. (“Orca”), operator of the Songo Songo gas field located in the southern part of Tanzania, has been producing gas in Tanzania since 2004.

Mnazi Bay field started producing gas in 2015 operated by Pertamina-owned Maurel & Prom partnered with Alberta-based Wentworth Resources and the state-owned oil company Tanzania Petroleum Development Corporation have a stake in the field.

For the complete business plan for establishing oil and gas exploration and production companies in Tanzania, contact us via +255655376543 or send us an email via info@tanzaniapetroleum.com

Although the petrol station business is one of the lucrative business opportunities in Tanzania. The high initial capital requirement has been a huge stumbling block holding back many small investors to tap into this profitable business opportunities.

Many small investors have given up on their idea to go into the petrol station when they heard that it require TZS 200 million to 1 billion for petrol station set up in Tanzania.

Don’t bother if you currently can’t afford the capital requirement.

EWURA (The Energy Water and Utilities Regulatory Authority), the government agency responsible for regulating downstream petroleum sub-sector of the oil and gas industry (including approving and issuing the license for petrol stations, liquefied petroleum gas LPG business in Tanzania), has released a guideline to help you tap into this business even as a small investor.

The simple truth is that the demand for petroleum products is growing at a fast rate in rural areas. The part of these reasons is the increase in economic activities in those areas.

Read also: Petrol station business plan in Tanzania

Look all around. All over the rural areas in Tanzania. Villagers rely on kerosene. Big trucks transport crops. There is still a power-failure problem, so, people depend on generators—both diesel and petrol powered.

Most importantly is the emerging mode of transportation. There are tricycles or boda-boda, as everyone calls it, and it has increased the demand for petroleum products in rural areas. The good news is that all these vehicles and generators run on diesel or petrol that you can set up in your fuel station and get huge income selling it. The surprising truth is that there are fewer filling stations in rural areas. EWURA.

Even EWURA has set up less requirement to encourage investors on set up stations in those areas.

It’s cheaper to start. To set up a mini fuel station in rural areas can cost you less than TZS 58 million. But I would advise you to invest more if you can afford more.

And you can easily raise the capital without begging, bribing, or cajoling friends who might not willing to help you. Also, you can start small like this and grow bigger and develop more stations in other cities of the country.

If you have read my articles on purchased my feasibility report on how to set up profitable petrol station business in Tanzania, you will discover it require 

Tsh 200 million to 1 billion to set up a petrol station in Tanzania especially in town areas. Now huge start-up costs are not barrier to become a petrol station business owner.

If you’re passionate about starting a filling station and have limited funds. I would advise you it’s pretty cheaper to set up a mini fuel station in rural rather than in a commercial city. Moreover there less government requirement for setting up a petrol station in rural areas as the EWURA want to encourage investors to set more fuel stations in remote locations 

For example, as only a minimum size of 400 square meters of land space, EWURA can approve for mini fuel stations set up in those areas. And you can start with two storage tanks. Depending on which fuel products have high demand in your location but you can start with one tank for diesel and one tank for petrol. All of 5,000 or 4,5000 liters capacity.

How to Get Started With Profitable Mini Fuel Station In Tanzania

1.Business Plan and Feasibility Report.

Modern business start with a comprehensive business plan. To respond with rapid changes in the industry like regulatory changes and oil price volatility, successful oil and gas business owners have embraced the business plan for strategic planning as well as to respond with uncertainty across the industry.

The sad reality is that most Tanzanians don’t understand the value of the business plan. Their needs for the business plan come when they consider requesting a bank loan. 

Technically speaking, in today’s competitive oil and gas business, develop your own business plan will help you stand out from the crowd. Petrol station business can be lucrative that needs a lot of strategic planning. Most Tanzanians when they first consider joining the petrol station business were motivated by high-profit margin per liter rather than the total sales volumes that the petrol station business generates.

It is not a secret that the petrol station business can make a profit margin of 100 to 300 per liter. But since the business generates a solid profit margin does not mean it would be profitable for you.

Let’s say your margin is TZS 200 a liter and you sell only 300 a liter per day. That will make you less money than some someone who has total sales volume around 6000 liters a day.

Hence why I strongly recommend investors to focus on total sales volume versus a profit per liter of fuel. And a comprehensive business plan can help you forecast your sales projections and help you see what kind of business you are building. 

2.Getting the Needed Government approval.

To construct and operate a petrol station anywhere in Tanzania, you will need government approval. There are several approvals you may need. From the National economic empowerment council to EWURA.

I would advise you to hire a consultant to assess if your location is commercial for starting petrol station business before you start the process of acquiring necessary permit and license

3.Getting EWURA Approval

EWURA is the government agencies regulate the oil and gas business in the downstream sub-sector or segment of the petroleum industry. EWURA approval comes in two ways:

1. Approval to construct.

After all environmental impact assessment carried out by NEMC, the building permit, and the land title dead you need to get approval from the EWURA to construct your station. You can’t build the petrol station the way you want. You have to meet the EWURA requirement. I will advise you to visit the EWURA office to learn more about their requirement.

2.License to Operate

After you have built the petrol station, you still need EWURA to approve it and give permission to start selling petroleum products. The license to operate your petrol station cost TZS 1,000,000.

I hope this helps.

If you’re brainstorming in order to find a perfect business idea in Tanzania, investing your cash in the petrol filling station business is a wise decision.

This business ensures steady profit in a reasonable time from setting up. You might feel the market is already flooded, but you can come in and have at it.

Petrol stations are in every street corner because they make insane profit

Don’t get me wrong. I am not saying this to brag. Instead, I am telling you this because I have carried out solid research.

So, I can confidently tell you that this is one of the right business opportunities to pursue.

Tanzania is expected to consume around 112,400 barrels per day (b/d) of refined fuel by 2025. This means that no matter how much petroleum
products are imported, still, extra will be needed to support the day-to-day economic activities in the country.

It  seems that there is high  entry barriers as the new entrants will have to invest  heavily in the initials capital requirements.

 But with proper, Petrol station business plan, you can get a loan from  bank  to start this business  and you will be able to pay back the money and the interest in about 8 months. 

Banks and investors are aware of the potential of petrol station business in emerging country like Tanzania and hence are willing to give out loans.

Now let’s see the profit margin of a petrol station business. It is very hard to determine how much you can make from the petrol station, because it depends on the following factors:

 Location: The location of a station is incredibly important to ensure the success of this businesses.A petrol station located in a high traffic area earns more income than if located in a low traffic region.

 Oil prices: Location is crucial for Profit margin tends to increase when oil price moves lower. Of course, the opposite can be true.

 Number of employees: The number of employees affect profit margin, too. And it differs from one petrol station to the other.

 Supplier: It depends on the supplier whom you source fuel from. Some suppliers leave a room for negotiating competitive prices.

 Products and services you offer: A petrol station that depends on income solely from fuel will earn little money than the one offering a variety of goods, such as fast foods, etc.

But an average petrol station’s sales is about 5,000 to 25,000 liters per day, based on the factor above, but the profit margin made by petrol station is TZS 100 to  TZS 310 a liter.

So, if you sell 5000 liters a day will make you TZS 100 × 5000 = TZS 500,000. In a month, you will have a profit margin of TZS 30 × 500,000 = TZS 15,000,000. That figure can vary widely, depending on where petrol station is located. For example, the petrol stations that are placed in high traffic areas have an average fuel sales of more than 25,000 liters a day. So for that rates, the profit margin per day will be TZS 100 × 25,000 = TZS 2,500,000 Again, in a month, that will make you 30 × TZS 2,500,000 = TZS 75,000,000. So, this is why petrol stations are on every street corner, because they make good money. So, everyone wants to jump into this business.

I hope this helps.

The pipeline project that will pump crude oil from Uganda Oil wells to Tanga port in Tanzania is on everyone ‘s radar. This is because of the vast opportunities the project create across the different sector of the economy.

It’s widely known that from the pre-construction through operation or the finishing phase, opportunities abound for different sets of businesses. Both local and foreign businesses in Tanzania and Uganda Economy. 

The project will demand different kinds of works and will provide different kinds of opportunities at different times or phases.

How do you tap into the opportunities? Do you just sit back and hope you get called to participate? Or you start knocking on office doors of oil and gas companies’ managers and hope they have a stake in the EACOP project?

That is why I am here.

Technically speaking, building the East African crude oil pipeline will require highly specialized skills, technology, and expertise. Much of this is not within its immediate capacity, with virtually little experience in oil and gas.

To be perfectly honest, these are capacities East Africa will instead have to build over time. It is encouraging that even early plans of the project management were seeking to incorporate training and development.

Despite the current limitation, opportunities are immense for local businesses to participate in the commercial aspects of the pipeline projects. And play an immediate role in supporting the oil and gas sector.

Opportunities for local businesses in the projects range from providing goods and supportive services to training and development facilitation as well as conference and industry events coordination.

Tapping into the EACOP project opportunities will require quick thinking, careful planning, and strategic action.

Local businesses looking to participates in this project should evaluate their capabilities, services, or products to identify how these can be modified or the best fist in the pipeline projects.

Also, local businesses should interact with operators, understand their needs, and embrace partnership opportunities with active oil and gas companies in Tanzania and Uganda.

This partnership is a good entry in the sector, To become successful they should make sure that their services and capabilities are meeting with international safety and standards
On the other hand, The project has attracted interest in many foreign service companies.

Leveraging their expertise and experience foreign companies are crucial for boosting local content in the oil and gas projects in Tanzania and East Africa.

Going alone is not the best option for foreign service companies looking to play an immediate and significant role in this project.

Forming a joint venture with a local partner is the best local market access. The foreign firms will get an entry in the local market and local business will learn the rope of the industry with no time if they want to benefits knowledge, expertise and technology transfer from the international firms
Before looking for this partnership, foreign businesses should study the market needs.

They should identify the projects’ and clients’ requirements and ongoing market forces and competition landscape. They should define what is the best entry strategy? They can research the market on their own or by retaining the service of consultants.

It is not enough to understand opportunities abounding the projects. To win works foreign and local businesses should understand the specific clients’ requirements, gather project data. You should understand regulation impacting the local industry.

With pipeline project expected to start on March 2021, both local and international businesses have short time to master it . But collaboration will be vital for their success.