What to Look For In A Local Partner That Will Be Your First Choice In Your Energy Project?

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Doing business in Tanzania and Africa takes work. When the truth is complicated and hidden, finding what you need to know to make informed decisions in a business relationship is critical to the long-term success of your project

Whether you are looking for a consultant, equipment supplier, or subcontractor to support your energy project’s success in Tanzania, making an informed decision based on complete and accurate information will be your best protection against business loss.

Here are some characteristics to consider when looking for a local partner in Tanzania and Africa.

1.Exposure and experience in the market.

The energy industry is unique because our value chain has many players with different interests.

A person who knows this market and is versatile with relevant players will enhance your clarity and help asses risk and maximize opportunities.

Before committing, you must assess your prospective local partner’s experience level and track record.

Working with experienced local partners who understand the unique challenges of our industry and local business environment is critical to get outstanding results compared to “good enough.”

2.Trustworthiness and integrity.
Another essential trait to look for in your local partner is his ability to deliver as they promised. Testimonials and references from previous work can help you make the right decisions. Also, agreeing on the deal with a letter of agreement or contract is vital to avoid misunderstanding and dissatisfaction. It would be best if you insisted on getting everything in writing.

I hope this help.

Tanzania – A Gas Nation In Development.

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It took a long time until the first gas was produced at Songo Songo field in Tanzania in 2004. Since then, several developments both onshore and on land have been made in Tanzania

In 2004, Canada- based orca exploration under its subsidiary Mauritius –based firm Pan African Energy started producing gas at Songo Songo field.

Also in 2015, Pertamina-owned Maurel & Prom partnered with Alberta-based Wentworth Resources, and the state-owned oil company Tanzaniapetroleum development corporation started to produce gas at the Mnazi Bay field.

Furthermore, Shell and its joint venture partners, London-based Ophir Energy and Sinagapore-based Pavilion Energy operate block one and Block 4 offshore Tanzania and have discovered about 17 trillion cubic feet of gas in both blocks.

Meanwhile, the Norway-based firm partnered with Exxon Mobil and found 22 trillion cubic feet of natural gas in block two offshore Tanzania.

The Development of Tanzania LNG.

In March, Tanzania’s Ministry of Energy and Minerals announced an agreement with Anglo-Dutch major Shell and Norway’s Equinor to develop a long-awaited LNG project in the south of the country.

The ministry said negotiations had reached a successful conclusion, and a Host Government Agreement is now being drafted, alongside a production-sharing contract covering the offshore acreage involved.

A final investment decision (FID) is expected in 2025, with the front-end engineering and design (FEED) phase preceding FID.
Construction time will likely be five to six years, suggesting the large-scale project could come on-stream around 2030.

A Brief History Of Oil and Gas Exploration in East Africa

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East Africa is the emerging hydrocarbon province of the 21st Century – but it is worth remembering that this success comes after six decades of unsuccessful exploration.
The exploration success in East Africa in recent years has been an exciting development and the resources discovered have the potential for great benefit to the countries involved.
So far three, maybe four billion barrels of oil have been discovered onshore in Uganda and Kenya and 200 (or more) Tcfg offshore Tanzania and Mozambique. Suddenly East Africa is on everyone’s radar. Let’s take a look at the history behind this apparently sudden success.

East Africa Exploration Time Line

A Map Guide to Exploration History in East Africa

Exploration in East Africa actually started early last century, beginning with Anglo-American’s Dudley Expedition to Abyssinia in 1920. The biggest effort was in Uganda and the Eritrean Red Sea where there was extensive shallow drilling around oil seeps. Systematic exploration did not commence until the 1950s, however, and it is there we’ll begin this review of the exploration activity in the region, decade by decade, looking at the pattern of exploration in the different countries, the companies involved, the objectives they pursued and what drove the fluctuating interest

Permits in East Africa 1950 – 2010

Showing wells drilled during each decade.

  • 1950s: During the worldwide surge in exploration after WW2 the Horn of Africa was seen as a potential extension of the Arabian oil province. When Sinclair Oil commenced field work in Somalia and Ethiopia, their first activity, they reported, was to scan the region for other structures similar to Saudi Arabia’s legendary Ghawar. BP/Shell were prominent in the then British colonies of Kenya and Somaliland but large American companies such as Mobil and Sinclair were conspicuous too, as was the Italian AGIP. 36 wells were drilled in the ‘50s, with many being stratigraphic rather than structural tests, including wells on the seeps along the shore of Uganda’s Lake Albert. There were encouraging oil shows in Sinclair’s Galadi well in Ethiopia and Stanvac’s wells on the Daga Shebel seep in what was then British Somaliland.

  • 1960s: Exploration activity increased slightly in the 1960s but permit areas decreased in Ethiopia and northern Somalia. The number of large and small companies was about in balance, though the large companies were still the dominant players. 40 wells were drilled but, while reflection seismic surveys offered improved prospect selection, few wells had significant shows. The gas flow at Sinclair’s Agfoi-1 in Somalia was probably the high point of the decade onshore. In the Red Sea, Mobil’s C-1 gas blow-out pointed to gas potential.

  • The 70s brought an influx of major companies, primarily into Kenya and Ethiopia, with Chevron, Elf, Total, Burmah, Tenneco and Exxon all making their entry to the region. Conoco took the industry’s initial look at the Lake Albert Basin. The list of permitees in the 1970s has only a few small companies on it. I worked for one of them – Whitestone, a Dallas-based independent – in Ethiopia and Kenya. Over the decade, 27 wells were drilled. Tanzania enjoyed the Songo Songo gas discovery, while Tenneco’s Calub and Hilala gas discoveries and oil shows established Ethiopia’s western Ogaden as a potential new hydrocarbon province. Unfortunately the military coup and war with Somalia brought exploration there to an end. Kenya and Somalia yielded only minor gas flows.

  • Despite these disappointing results, the enthusiasm of the large companies for East Africa saw activity rise to a new peak in the 1980s, driven by the soaring oil price and encouraged by big discoveries nearby in Sudan and Yemen. This increase was largely in Somalia and in Kenya, where exploration moved into the Anza Graben. In Ethiopia the main activity was a Russian co-operative project in the Ogaden. Exploration commenced in the interior Karoo basins in Tanzania, and along the lake basins there and in Burundi. 58 wells were drilled, 42 wildcats and 16 appraisals. 8 of these were following up Tenneco’s Ethiopian Ogaden discoveries; 2 trying unsuccessfully to prove commerciality at the Agfoi gasfield in Somalia, and 5 confirming the Songo Songo gasfield in Tanzania, where a second gas discovery was made at Mnazi Bay.

  • The 90s were a different story. The oil price had collapsed in the late 80s and got worse through the 90s. Local problems exacerbated the situation. Promising exploration efforts in Somalia were aborted after the 1991 Somalia coup and the anarchy that followed, but not before Conoco’s Nogal well encountered oil shows in the Upper Cretaceous/Tertiary Nogal Rift. In Ethiopia, the civil war ended and Eritrea seceded. Only 4 wildcat wells were drilled, 3 in red Sea. The 5 wells in Tanzania yielded no significant shows. In Kenya, Shell’s Loperot well discovered an uncommercial oil accumulation in the Lokichar Basin near Lake Turkana, but a perceived lack of structure discouraged further activity.

  • In the 2000s the oil price hike saw a swarm of exploration companies across East Africa, but, for the first time, the larger oil companies were not part of the onshore scene. The main players were NOCs such as Petronas, proven explorers such as Lundin, and a plethora of small independents. This permitting frenzy did not lead everywhere to a boom in activity. Across Ethiopia, Kenya, and Somalia only 5 wells were drilled – all disappointingly dry. It was a different story in Uganda’s Lake Albert basin, however: the Turacao wells discovered gas and Hardman’s Mputa-1 oil discovery in 2006 changed the game. 25 of the next 28 wells drilled in the region were oil discoveries and Lake Albert was suddenly a giant oil province. In Tanzania’s coastal basin, a string of modest gas discoveries – Mnazi Bay re-visited, Kiliwani, others – were an omen of what was to come offshore.

  • There has been a massive surge in permitting since 2010 in response to the discoveries and almost all basin areas are under permit, save for most of Somalia where security remains a major problem – 95 wells were drilled to end 2013. In 2010, Pweza-1 discovered gas in deep-water Tanzania and numerous other major discoveries followed. In Kenya, Tullow discovered oil in Ngamia-1 in the Lokichar Basin, and have since made several more discoveries. In Uganda, there have been numerous new discoveries and successful appraisal on the Albertine oilfields. Conversely, much anticipated drilling in Ethiopia’s Omo Basin, on trend from Kenya’s Lokichar, was unsuccessful, as was drilling in northern Somalia.

Drilling Over the Decades

Explorers new to the region are often surprised to see that the main players historically in East Africa have been the large international companies; companies like Shell, AGIP, Conoco, Elf, Texaco, Amoco, Mobil, Exxon and Chevron. This is an impressive group, to say the least, and they have held East Africa in high regard for a long time. They lost interest in the 90s but many have been lured back by the scale of the recent discoveries.

Wells drilled in each country by decade showing discoveries. (Source: Peter Purcell)The chart of wells drilled in each country per decade shows how discoveries – and oil companies – have moved around the region. Somalia dominated the early decades leading to the Agfoi discovery, but otherwise has had only modest results, while Ethiopia had the Tenneco Calub and Hilala gas discoveries, but size and security problems have weighed against development. The Ogaden has an impressive pattern of good oil shows but no significant flow. Kenya had oil and gas shows in early drilling but the omen of good things to come was Shell’s small Loperot oil discovery in the 90s. Tanzania has the early onshore gas discoveries at Songo Songo and Mnazi Bay and then spectacular multi-Tcf gas discoveries as deep water drilling commenced in the 2000s. Uganda had early shows in stratigraphic wells in the 30s and 50s, and then nothing until the boom of the 2000s.

The trend has changed. From Kenya through Tanzania to Uganda, the chart is soaring. The potential for further discoveries is high. The potential economic benefits to these countries are many. So too are the challenges, both technical and social.

Lessons from History

There are a number of lessons we can learn from this history. For explorers, there is the always useful reminder that early results must be carefully considered, especially where there are seeps and shows involved. There is the encouragement, already taken up by many companies, that the other Tertiary rift basins of East Africa might also host large oilfields, perhaps especially the Western branch which is almost undrilled beyond Lake Albert. There is encouragement from the Lokichar discoveries that portions of the more volcanic Eastern Branch can also be petroliferous. There is also encouragement regarding the potential of offshore Somalia, along trend with the giant gas province to the south. However, we must also remember that the recent discoveries do not upgrade all the basins of East Africa, only those which are geologically analogous.

The history also offers some insights into the complex social and political situation now challenging our industry in these countries. Those decades of unsuccessful exploration bred intense economic frustration but that has been over-printed by the recent successes. Expectations are now very high, unrealistically high, both in terms of economic benefit and further discoveries. East Africa is seen by many as a vast oil province and huge discoveries are expected across the region. These views prevail at all levels of society, right up to the Ministerial offices.

This expectation is adding to social and political conflicts in the region, as groups – local, tribal, national – vie for control of land where they expect oil or gas will be found. Many of the issues are old, but the proximity or promise of oil or gas wealth is an added and complicating factor.

A summary of East African conflict zones. (Source: Peter Purcell)There are several international border disputes near the discoveries or areas of potential, real or imaginary. The Sudan/Kenya dispute over the Ilemi Triangle area, for example, is adjacent to the Lokichar discoveries. Uganda and Congo disagree over Lake Albert borders. Tanzania has disputes with both Malawi and Congo over lake-basin boundaries. Armed conflict in the Ethiopian Ogaden and between Somaliland and Puntland are both invigorated by the perceived promise of oil riches. Offshore, oil and gas potential is a factor in the Kenya/Somalia dispute over the maritime boundary and a contributor to increased tension between Tanzania and Zanzibar.

Where discoveries have been made in Uganda and Kenya, conflicts over entitlements and revenue sharing between local and national communities are already challenging the governments and companies involved. Similar challenges can be expected wherever new discoveries are made. Knowledge of the history of exploration in a region, and the role it has played in shaping community beliefs and expectations, may help companies to understand and manage the complex social and political demands that now confront them in this region.

Key Factor to Stay Competitive In Lubricant Blending and Manufacturing Business in Tanzania and East Africa

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The lubricants market in Tanzania is growing fast and getting more competitive. Consumers have more choices with the proliferation of new lubricants in the market.

In this ever-changing market, lubricant manufacturers/blenders and marketers must focus on the base stock quality they use to compete and comply with enormous regulatory and local and international standards.

In recent years, vehicle ownership has increased in the region.And with the increasing of used vehicles, using group 1 base oil is vital in manufacturing various types of high-quality lubricants(engine, hydraulic, gear, industrial, greases, etc)

Is There A Future For Petrol Station in Tanzania?

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By Hussein Boffu

The petrol station is a resiliency opportunity, albeit capital-intensive, due to the nature of its assets.

The population of this country is growing. The number of cars on the roads is increasing. So our economy and people need more fuel.

Demand for conventional fuels (such as diesel, petrol, lubricants, and LPG) will remain for decades.

Unlike Europe, where the filling station investors make most of their money from non-fuel products like drinks and foods.

The petrol stations in Tanzania make most of their money from fuel up to 60 to 80 percent depending on the locations.

For urban sites, non-fuel products will become increasingly relevant in convenience retail, food service, car wash service, and other ancillary offers.

Like in any sector, the challenges are there, but the way we approach the challenges is by focusing on opportunities and making the right decision.

The first issue is declining in sales volume. Regulators fix the margin. And there are  proliferation of new petrol station brands in the market.

In many sites nationwide, most petrol stations sell based on cost leadership and heavy discount. This reduced sales volume, which in turn led to reduced revenue.

The other challenge is navigating onerous regulations and industry standards. The petrol station is a unique sector.

Many regulations need to be fulfilled to run successful petrol stations.

Another area for improvement is the supply chain. We know that we need to ensure the constant availability of fuel in the stock.

However, we know that with a well-planned location, a clear understanding of consumer demand, and employ aggressive marketing strategies, you can navigate this complex industry and walk like a winner.

With this scenario playing out daily, petrol station owners need well-planned locations proximate to demand.

Also, non-fuel products and services development like food services, restaurants, mini supermarkets, coffee shops, car washes, garages, and other complimentary services.

That’s the future of petrol station owner-businessmen who wear many hats in an ever-changing business environment.

Promoting the Use of Liquefied Petroleum Gas (LPG) in East Africa.

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. By: Eng. Amos Jackson Mwansumbule.
Executive Director of Tanzania LPG Association, CEO & Founder of Sarojoah Enterprise Company Ltd, and Published Author.

Energy is one of the important end products of various forms of matter thus, solid, liquid,
and gaseous materials. Energy drives the world’s economy and indeed, each country’s
economy.

The type and amount of energy produced and used in a given country may
define or indicate how advanced the economy and general well-being of the society in that
country is.

The most indispensable use of energy is cooking food, and because food is one
of the most basic needs of a human being, cooking energy is the most important one
because it is for people’s lives.

It, therefore, makes sense to pay special attention to cooking energy sources, especially “clean sources .”In East Africa and, of course, most sub-Saharan African countries, the most used source of cooking energy is biomass, thus fuelwood, charcoal, and paraffin (kerosene).

These types of sources of cooking energy are used because they are easily accessible, affordable, reliable, and traditionally known.

Other energy sources, such as electricity produced from different sources (non and renewables), seem to have trilemma challenges (especially in rural areas) such as accessibility, affordability, and security/reliability and may therefore take some time before such challenges are addressed.

Another efficient source of cooking energy for East African countries could be natural gas.

However, natural gas is produced in Tanzania and,to some extent in Rwanda, and it has a challenge of requiring significant distribution costs.

It is understood that all East African countries ratified the UN 17 GOALS – Sustainable Development Goals (SDGs), including GOAL No.7: “Ensure access to affordable, reliable, sustainable and modern energy for all .

“According to WHO and Clean Cooking Alliance Organization, air pollution is a leading environmental risk where about four million (including about 450,000 children under five years) people succumb to dirty fuels per year.

Furthermore, about 16% of air pollution globally comes from household air pollution caused by dirty fuels, which contributes to respiratory diseases.

climate change effects such as drought, floods, hurricanes, storms, tsunamis, et al., are also caused by using biomass through deforestation and carbon footprint production.

Due to the adverse effects of biomass, it is therefore important that biomass is replaced by an alternative source (s) of cooking energy, and given the challenges other sources have, as explained above, Liquefied Petroleum Gas (LPG) is currently the most compelling solution to biomass in East Africa.

LPG product is produced along with other hydrocarbon products such as petrol, kerosene, diesel, etc., through a refining process of crude oil or natural gas by separation process.

Crude oil and natural gas are naturally formed under the earth in special rocks, and their sources are believed to be dead and longtime decayed living organisms (animals and
plants).

LPG is an efficient source of cooking energy due to its key properties, such as; the production of a lower level of pollutants (carbon footprint) than biomass, and it has relatively higher energy content compared to biomass – thus, you can use less equivalent units (equivalent unit of electricity in KWh or Kilogram of charcoal versus Kilogram of LPG) for cooking similar type of food under the same conditions than biomass.

Another benefit of using LPG is that it saves time, is more convenient (flexible) than biomass, and does not deposit soot on the surface of the cooking utensil and kitchen walls or surroundings
.  Lastly, LPG is filled in portable cylinders that can be transported to rural areas, making it more accessible to consumers.

Despite such LPG benefits over biomass, research done in 2022 by African Insight Advisor Organization (AIAO) in Tanzania indicates that most population uses dirty fuels and only about 1% of the rural population uses Liquefied Petroleum Gas (LPG), a cleaner source of cooking energy than biomass, compared to about 54% in urban areas.

The relatively low use of LPG in rural areas, according to AIAO, is due to low limited
accessibility of LPG, low awareness, and affordability challenges.

LPG consumption in East Africa has been growing exponentially, especially in Kenya, Tanzania, and Rwanda, where the annual growth has been at least 15%.

However, compared to other African Regions, such as North African countries where per capita consumption is more than 20 Kg per person per year, LPG per capita consumption in East Africa is relatively low.

Kenya is leading at about 6Kg per person per year, followed by Tanzania and Rwanda at about 2.5Kg per person per year and Uganda as well as Burundi having less than 2 Kg per person per year.

Low LPG penetration and consumption in East Africa has been due to relatively limited accessibility due to inadequate investment in LPG infrastructure network within the supply chain (port facilities to handle big LPG ships, receiving and storage terminals, roads, remote cylinder filling plants).

However, there has recently been a steady increase  Another challenge has been the low level of awareness of the benefits of LPG products to consumers against the perception of safety risks which many consumers may have a negative view of and therefore discouraging them from using LPG even for those who can afford to use it

. There has also been a challenge of affordability, considering that many communities in East Africa live below the UN poverty line and that LPG products and related equipment are almost 100% imported from outside the region.

Therefore, it is essential that some transformational initiatives are formulated and rigorously implemented to stimulate LPG consumption in East Africa further, and these should be done jointly between the government, private sector, and other stakeholders.

The governments should lead by urgently coming up with fit-for-purpose effective policies, laws, and campaigns that encourage societies to shift from dirty fuels to modern energy sources such as LPG, work with the private sector to identify key investment incentives to attract more investment in LPG sector (such as removal of taxes on the product, facility equipment, cylinders, and accessories), ensure motivating regulatory framework is in place especially on technical specifications and trade competition compliance, sustainably protect both consumers and investors as well as put in place
impactful transparent monitoring review and control mechanism.

In addition, governments should, through relevant data management systems and decision-making (identification, collection, storage, analysis, interpretation, and reporting), understand the cost spent as a result of household air pollution diseases’ treatment and drought incidents management, which are caused by the use of biomass that causes deforestation and compare that against the cost will be required to subsidize LPG prices to increase the level of penetration and consumption.

One of the hypotheses that can be tested is; “it takes a relatively lower cost to subsidize LPG prices to increase the population that uses LPG than the cost spent to treat people suffering from household air pollution-related diseases such as respiratory and visual as well as drought incidents caused by biomass use.” If this hypothesis is valid, which I believe it is, East African governments will need to subsidize LPG prices, especially for low-income earners, to swiftly, increase the use of LPG over biomass.

Drilling and Well Cost Optimisation Using Digital / Smart Technologies

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By Naim Saddiq CEng, Managing Director: Oxford Well Engineering Limited

With the global oil and gas industry gearing up for action, a vast number of drilling & completion projects are being pushed through the initial planning (FDP) and FEED gates.

In the backdrop of current global energy crises, there is considerable time pressure to deliver reliable energy as soon as possible.

We must, however, remember to guard against common costly (wells) mistakes, which have historically resulted in huge sunk costs arising from overly expensive and/or poorly constructed suboptimal wells.

A lot of wells, which were constructed cheaper had to be worked over within the first few years which should not ideally be the case.

For future wells, it would be prudent for smaller E&P companies to engage “Well Optimisation Expertise” which could be visualized as a thread passing through ALL drilling project layers, thus yielding best results for the wells project costs.

From our experience, we noticed that most large operators tend to drill complex wells a lot cheaper compared to smaller operators even with similar designs and experienced people onboard.

Their success could be primarily attributed to extensive upfront well planning and design optimisation which is usually followed by data-driven, expertly controlled well project executions. In a nutshell, wells teams need to get it RIGHT the very first time.

Once the design is finalized, the well cost is written in stone even with best of drilling efficiencies you will have expensive wells.

From decades of experience, a road map of optimisation could be furnished which could deliver an all around well cost optimisation through use of digital and well engineering tool in a systematic manner. The road map could be summarised as per figure below:

 

In the road map figure above, it can be highlighted that well cost optimisation must start with specialist tech-based offset analysis which is the most important stage where firm reliable foundation of a drilling project is created. Once that is done, we must let data-driven knowledge and data calibrated engineering analysis to percolate through all layers of drilling project gates/phases.

During the well construction phase, data-driven Real-Time Drilling optimisation must deliver top quartile wells which are constructed cost-effectively, always ensuring that safety and well integrity remains intact.

 

Tanzania LNG Project Gains Critical Momentum

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BY: Neil Ford

Tanzania’s Ministry of Energy and Minerals announced in March an agreement with Anglo-Dutch major Shell and Norway’s Equinor to develop a long-awaited LNG project in the south of the country.

The ministry said negotiations had reached a successful conclusion and that a Host Government Agreement is now being drafted, alongside a production sharing contract covering the offshore acreage involved.

There is a long way to go before the project is actually developed, but it has never looked more likely to be built.

A final investment decision (FID) is expected in 2025 with the front-end engineering and design (FEED) phase preceding FID.

Construction time is likely to be five to six years, suggesting the large-scale project could come on-stream around 2030.

Plentiful feedstock Blocks 1, 2 and 4 in the Mafia Deep Basin off the southeast coast of the country will provide feedstock for the plant. Equinor operates Block 2 with a 65% stake, alongside partner ExxonMobil, which holds the remaining 35% equity. Equinor estimates reserves on the block…

Have You a Big Idea?

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Have you a big idea? Are your ideas forceful? If they stay with you from day to day. If they give you no rest, night or day

Ideas make a business. Realize that the greatest business- the most extraordinary success- individually and commercially- has started from a simple idea. Ideas are capital. Ideas are growth.

But more than having an idea is required. You must turn it in the right direction.

You must persevere in the right direction once you are confident that you have found the right direction, plus determination will drive success to your petrol station idea.

Determination is crucial in driving the success of your idea.

If a man is in business, let him only be satisfied once the business is grounded in success.

Also, the difference between ideas and lack of them is not so much on the brilliance of the particular ideas.

But reasonably good ideas are concentrated on and carried through implementing such ideas.
Turning your vision into reality can bring tremendous benefits and growth to people and society.

Because I believe the vision denied is growth denied.

Steps to Powerful Health and Safety Management System(HSMS).

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By Alex Kasengo. HSE specialist.

Several elements constitute a powerful HSMS, but among these, Leadership Commitment plays a critical role. Without leadership commitment, no resources will be allocated to management HSE.

The presence of the leadership team in the field makes employees and contractors believe HSE is a game for all, not employees only.

Other components needed for a successful HSMS are Health and Safety Plan, policies and procedures, training and competency, risk management, incident reporting and investigation, emergency response and preparedness, etc.

Lastly, monitoring and evaluation are crucial; this will give you a direction where to hear to.

‘If all those elements are put together, they will be like a framework to provide you with a guide to thriving and achievable HSMS.