Collaborating to Build A  World-Class  Workforce Competence For  East African Oil and Gas

/in /by

The key shortage in East African oil and gas is one of the qualified personnel with skills and expertise to deliver productivity and high performance needed.

Even as oil prices began to recover in 2017 and 2018, the oil and gas industry remained focused  and now place a huge premium on productivity, innovation and  high performance of the workforce. And that is expected to continue in 2020 and beyond.

From the first day, I entered the oil and gas industry, I have been told that the industry need competency. It is an industry in which operational safety, productivity and high performance are paramount.

What happens if you don’t be able to hire skills  quickly enough or insufficient volume to deliver the innovation, productivity  and high performance required.

The answer is pretty simple. You are going to delay production. You are going to increase overall operational costs. And the whole East African oil and gas industry will become less profitable in the long run.

Research indicates that, the oil and gas industry is adopting new technology. But software competence and ability to use up-to-date technology are not readily available with graduates and young professionals. And need to be urgently trained and developed for the benefit of businesses communities and countries.

This article is set out to answer a number of key questions about a new revolutionary approach to address a skills shortage primarily in Tanzania and regionally in East Africa.

How employers in the oil and gas industry, education providers work together  more collaboratively to raise performance standards of  work competence of the Tanzania’s oil and gas sector  and propel it to become  world-class, internationally competitive and prosper for the benefit of all stakeholders?

How to prepare our graduates who are facing rapidly changing job market characterized by advanced technology to become  internally competitive?

What are the best collaboration strategies  between regional universities with oil and gas curriculum and their foreign counterpart to create world class graduates versus local champion?

Answers to these questions are essential for employers, colleges with oil and gas curriculum,  private training providers policymakers, and other stakeholders to make a revolution in training and development of local capacity and move them from just local champion to world class levels.

Dr. Mohamed Mahgoub, the Geophysics Expert in the Gulf Countries from his point of view and his wide experience in oil and gas since 1990  says “Challenges and opportunities in Tanzania shall be addressed through developing local resources, capacities and finding collaborative solutions and prepare Tanzanian and East African students to be world-class graduates with upgrading their syllabus through partnership with international high ranking universities and training and developing the African young professionals and move them to professional Specialists and Subject Matter Experts.”

                A road Map  For Performance Improvement In The Oil and Gas Industry

Here are  two collaboration strategies to strengthen work competence of the East African oil and gas sector:

  1. Creating Formal Partnership Between Colleges and Employers In The Oil and Gas Industry

To address the skills shortage, East African Universities and colleges  should collaborate and work jointly with employers in the oil and gas industry to develop curriculum, or provide materials and equipment  for students to engage in hands-on experiential learning. A partnership between colleges and oil and gas employers in the development and upgrading of curriculum will ensure they programs offered at colleges are aligned with the oil and gas industry needs and will result in performance improvement in the workplace. For example, oil and gas service providers donate free software for seismic data processing as the CGG Seismic service provider has established seismic processing unit with Geovation processing software for Sultan Qaboos University in Oman and other universities in Africa and different areas of

  1. Collaboration with internationally higher-ranking universities in this oil and gas related curriculum

A consortium between University and Industry and world specialist organization in Education institutes or universities to standardize the oil and gas students Curriculum for4/5 year program. Universities; especially for oil and gas should have a close collaborative consortium with internationally higher ranking universities in this oil and gas related curriculum which having the state-of-the-art technologies and related sciences. Partnership with those super major universities is fundamentally needed to help with significant improvement in the education system and producing world class graduates who are internationally competitive

                                                         Final Words

Collaboration is key to aligned training and development with industry needs. Furthermore is the way to move the industry professionals from just users and followers to expat experts to professional independent focal point. That resulting in producing local leaders of the oil and gas industry and they will able to leading the industrialization phases execution accordingly.

China bids for Turkana oil as Tullow and Total count losses

/in /by

After watching from the sidelines for years, China is back on a front-row seat in the bid for Kenya’s oil, as the project’s joint partners grapple with uncertainties due to lack of funds.

China has emerged as the favourite potential partner to help Kenya realise its oil dream after the key players, Tullow Oil Plc and Total SA, kicked off the process of selling part of their stakes in oil discoveries in South Lokichar, Turkana County.

The farm-down by the two oil majors will further delay the project, which has seen its timelines shift every year, raising the costs, which will eventually be borne by the taxpayer.

The Nation understands that China National Offshore Oil Corporation (CNOOC) is one of the favourite bidders for the 32.5 per cent stake up for sale, which would make it the majority partner in the project and a key decision maker in unlocking the current limbo.

SELLING SHARES

Currently, Tullow has a 50 per cent stake, with Canadian firm Africa Oil and Total SA holding 25 per cent each. Tullow has announced that it is selling 20 per cent of its shares, while Total is offloading half of its stake, or 12.5 per cent. The new shareholding structure would be CNOOC 32.5 per cent, Tullow 30 per cent, Africa Oil 25 per cent and Total 12.5 per cent.

People familiar with the matter told the Nation that CNOOC has a large strategic interest to bundle the Kenya oil assets together with those it manages in Uganda. The Chinese firm owns 33 per cent of the assets in Uganda’s Albertine Basin, together with Total and Tullow. They were once the largest investors in Kenya’s hydrocarbons, when they came in to explore for oil in Isiolo, but exited after failing to hit a find.

Industry experts say this would be a perfect opportunity for them to buy in.“They are primed to have these assets,” said a source.

Tullow Kenya managing director Martin Mbogo confirmed that discussions were ongoing but could not divulge details of the progress. He, however, said a new deal could be sealed by June this year, but added that he was “not at liberty to say with whom”.

NON-DISCLOSURE AGREEMENTS

Saying that China was “not off the table”, he told the Nation on Thursday that “those in this process demand that we honour the non-disclosure agreements”.

“However, we are looking for a company that shares in the vision of the project in Kenya and has the capacity to work in such frontier markets,” said Mr Mbogo. “Our expectation is that by June, we’ll have narrowed down to who is interested and what we can get out of this, then conclude.”

Should China clinch the deal, it will cement its presence in key infrastructure projects in East Africa. Aside from having oil assets in Kenya and Uganda, it is also in South Sudan, where it gets oil as payment for developing the country’s transport infrastructure, and in Ethiopia.

 

In Kenya, Beijing is credited for major projects such as the Sh500 billion-plus Standard Gauge Railway line by China Roads and Bridge Company, the Sh32 billion Lamu port by China Communications Construction Company, and several key roads.

The deal would be in Beijing’s great favour in the scramble for Africa between China and the West, locking down key projects under the Beijing’s Belt and Road Initiative.

Tullow says it expects to use the proceeds from the farm-down to offset the costs it has incurred and plough back some of the cash into the project, which it says it is “firmly committed to, till the end”.

Total was initially primed as the partner that would have bought out Tullow, but industry sources say that the French firm did not really go out to buy the Kenyan assets, but acquired them from Maersk Oil & Gas, which exited the market.

“Total didn’t intentionally buy the Kenya assets. Kenya was bundled together with other Maersk assets that Total bought. Given that they are also selling down, it is unlikely Tullow would be selling to Total,” an insider said.

MAKE DECISIONS

The Chinese oil firm is expected to make key decisions on the project and move it out of limbo.

Mr Mbogo, the Tullow Kenya MD, said the new partner will have a direct say on how the project goes, especially if they buy the other farm-down, which would make the process faster, cutting back on the delays.

Tullow and Total have now hired Paris-based investment bank Natixis SA to assist with the sale. The London-listed firms’ sale, Mr Mbogo said, was part of a broader review of its operations and assets intended to simplify the business and cut costs.

“This isn’t something new and the farm-down isn’t a reflection of our financial position. We are sound financially and this re-arrangement of portfolio had already been agreed upon way earlier,” he said, adding that the restructuring, which saw it lay off some of its employees, was a normal process.

DISAPPOINTING RESULTS

The firm, which has been burning cash in the Turkana project, is said to have opted for this sale after disappointing exploration results in Guyana and production problems in Ghana that led to the removal of the global chief executive Paul McDade in December last year and wiped out nearly half of the company’s market value.

Petroleum Principal Secretary Andrew Kamau said the government “is aware of Tullow’s plan, which is not expected to delay investment in production or the proposed pipeline”.

The Nation has however learnt that the government has written to Tullow demanding an update on its financial position, citing the Production Sharing Agreement, which was pegged on its stated good financial health.

Tullow now says it will spend Sh4 billion in Kenya this year, a drop from last year, and sources say the firm has also been forced to bear a huge chunk of operational costs as Total failed to approve budgets for 2019 and 2020.

Africa Oil, in its latest trading update, said it had spent Sh2.9 billion in the nine months to September 2019 on appraisal stage projects relating to blocks 10BB and 13T.

“Some of our joint venture partners didn’t approve their budgets for 2019, and also this year. This saw us spend above our shareholding agreement, pushing up our expenditure. I am now under firm instructions from my board to spend within our shareholding structure for this year,” Mr Mbogo said, adding that the board had approved Sh11 billion for the project this year, with Tullow expected to shoulder half of it.

“We are waiting for our joint partners to approve this so that we can push through to the financial investment decision. However, delays in getting such budget approvals hurt the project, pushing up costs,” he said.

Africa Oil’s Sh2.9 billion spending for the nine months to September 2019 included expenditures related to geological and geophysical studies, development studies (including upstream and midstream Front End Engineering Design, land acquisition, Environmental and Social Impact Assessment, water acquisition and subsurface reservoir studies) as well as general and administrative costs as per the agreements.

ADDITIONAL AMOUNT

Under the terms of a farmout agreement completed in 2016 with Maersk, who were bought out by Total, upon a Final Investment Decision of the South Lokichar development project, Total may be obligated to carry the company for an additional amount of up to Sh40.5 billion, dependent upon meeting certain thresholds of resource growth and timing of first oil.

“To date, a receivable has not been recorded in our financial statements, given the uncertainty surrounding both resource growth and timing to first oil. Until the final South Lokichar Basin development and financing plan is approved, we will continue to assess the sufficiency of its capital resources.

“Our current working capital position may not provide it with sufficient capital resources to complete the development activities being considered in the South Lokichar Basin,” Africa Oil said in the trading update.

FOUNDATION STAGE

In the earlier plan, Tullow and its partners had proposed to the government that the Amosing, Ngamia and Twiga fields be developed as the foundation stage of the South Lokichar Development. This stage includes a 60,000-to-80,000-barrels-per-day Central Processing Facility and an export pipeline to Lamu.

“This is still the plan and we expect the installed infrastructure from this initial phase to be utilised for the optimisation of the remaining South Lokichar oil fields and future oil discoveries, allowing the incremental development of these fields to be completed at a lower unit cost post first oil,” Mr Mbogo said.

The gross capital expenditure associated with the foundation stage is expected to be Sh300 billion, which Mr Mbogo said included Sh1 billion for the pipeline and Sh2 billion for the oil project.

“So far, Tullow has spent Sh1 billion on this project, with the other partners spending the difference. We are, however, confident that we shall make the final investment decision by end of this year,” Mr Mbogo said.

Credit: Daily nation

Pan African Energy Sees Gas Demand Rising In Tanzania

/in /by

PanAfrican Energy Tanzania (PAET), suppliers of up to 40% of Tanzania’s gas for electricity production and industrial use, has unveiled a plan to spend an estimated $48mn this year to boost output.

In an operational update released on January 28, PAET says the planned investment was informed by its expectation of higher demand for gas this year and beyond.  Driving the demand should be the anticipated completion of another unit at Kinyerezi power plant in the third quarter of this year and a new 185-MW combined cycle generation facility likely to be commissioned by December.  There is also potential demand from the country’s expanding network of compressed natural gas stations for transport.

Managing director Andy Hanna said PAET will invest in compression, work-overs and flow-line de-bottle-necking to sustain production and meet the projected demand up to October 2026.

Read also: Is Swala Oil and Gas Driving Hard Towards 2020

“The company plans to carry out a number of challenging technical projects to meet demand and increase access to the benefits that Tanzania’s indigenous natural gas resources bring to the nation,” he said.

PAET, a subsidiary of Canada-based Orca Exploration, operates an offshore gas field at Songo Songo under a production sharing agreement with the Tanzania Petroleum Development Corporation (TDPC).

About $1.3mn will be spent on the flow-line debottlenecking project that will begin this month, he said. In total, the work to boost compression will cost $38mn, $34.2mn of which is forecast to be spent this year.  The remainder will be utilised next year when the work is billed to end.

In addition, PAET is evaluating options to work over three onshore wells on Songo Songo Island this year at an estimated cost of $13.1mn. One of the wells is producing but two are shut in. Working the two over will increase output. However, the timing and full scope of the work-overs is subject to board approval and endorsement from Songas, which processes and transports gas by pipe for power generation.

Demand for gas was strong in 2019, said PAET, consistent with the central bank’s recent statement that the east African nation’s gas output rose to 60.3mn ft³ in the June 2018/May 2019 period, up from 54mn ft³ in the previous year due to rising demand for electricity generation.  PAET forecasts the trend will continue in that way this year and in the coming years.

The company supplied an annual average of 63.1mn ft³/d of gas last year, a huge jump from 39.9mn ft³/d in 2018. TPDC bought some 9.2bn ft³ of the output which it in turn used to generate electricity or sold to industry.

Gas Output at the Tanzania Mnazi Bay Project Dropped

/in /by

Output of the Mnazi Bay gas project in southern Tanzania dropped last year as a result of weaker gas demand, Wentworth Resources, one of its developers, said in a statement on February 3.

The Mnazi Bay gas field, located in South-eastern Tanzania, started producing gas in 2015 and is being operated by Pertamina-owned Maurel & Prom partnered with Alberta-based Wentworth Resources. The state-owned oil company, Tanzania Petroleum Development Corporation, has a stake in the field

A subsidiary of Indonesia’s Pertamina with a 48% stake, while Wentworth has almost 32% and Tanzania’s state-owned TPDC 20%. The asset produced 70.29mn ft3/day of gas in 2019, Wentworth said, down from 83.2mn ft3/day in the previous year.

Read also:   Is Aminex Getting Ready To Supply the Much-Needed Gas In Tanzania

High rainfall during the year resulted in increased hydropower production in Tanzania, curtailing gas-fired generation, Wentworth said. The National Natural Gas Infrastructure (NNGI) pipeline also received more gas from an offshore Songo Songo field, curbing demand for Wentworth’s supplies.

One of the Mnazi Bay wells, MB-2, was temporarily shut-in. It restored flows on December 21 after flowline repairs, and other well, MB-4, has been recompleted, raising its output by 15mn ft3/day, Wentworth said.Mnazi Bay is expected to produce between 65-75mn ft3/day of gas in 2020, according to Wentworth. The project’s developers signed a gas supply agreement with TPDC in September last year for 80mn ft3/day of gas in 2020. The contract includes an 85% take-or-pay provision, meaning that TPDC will pay for at least 68mn ft3/day of gas, regardless of how much it wants.

Worley to Support Development Of Total’s Mozambique LNG Project

/in /by

Worley has been awarded two master service agreements (MSAs) by Total E&P Mozambique Area 1 Limitada to provide services to the Mozambique LNG Project.

Under the MSAs, Worley will provide in-and-out of country services, including engineering, consulting and specialist engineering for delivery of onshore and offshore (subsea) facilities. The services will support the development of the new LNG facility.

Read also:Is Swala Oil and Gas Driving Hard Towards 2020

The services will be executed by Worley’s local Mozambique operation with support from Worley’s global businesses including Advisian. Worley has supported the LNG development, located on the Afungi peninsula in Cabo Delgado province, since gas was first discovered there in 2010.

“We are pleased to continue providing services to the LNG development and to support one of Africa’s largest projects. Through the MSAs, we will help Total and its partners in the Mozambique LNG Project meet the world’s changing energy needs,” said Andrew Wood, Chief Executive Officer of Worley.

(Source: Worley – Image: Total)

Seven New Skills and Workforce Requirements Searched By Oil and Gas Companies From Modern Workers

/in /by

The oil and gas industry has changed in the past few years. Fluctuating oil prices, regulations, and technologies, presenting opportunities for skilled workers.

Increasing productivity and high performance of the workforce have become higher priority areas across the industry. Today oil and gas companies need to get the most from the workers.

To be successful in today’s marketplace, whether unemployed or employed oil and gas workers you need to redirect your career to match new job roles.

The best news is that knowledgeable workers with transferable skills will have advantages

Here are new skills and qualities searched by oil and gas employers.

  1. Software competency and ability to use up-to-date technology.

Technology transforms how we live and work. And the increasing use of technology in the oil and gas industry, helps companies lower costs, improved safety and drive efficiency.

If you were a geologist, geophysicist or Geoscientist at oil and gas companies in Tanzania or East Africa your whole co-workers and management will be super happy if you are capable to use software to do seismic or data acquisition design using your laptop. Because you save them a lot of headaches and hassles. Furthermore, you save the company hundreds or even thousands of dollars that are paid to seismic providers to designs.

. If you are those professionals who are uncomfortable with new technology, you are going to get left behind. Sorry

  1. Be aware of the regulatory and compliance.
    With new regulations governing oil and gas project approvals and the need for compliances, oil and gas companies require professionals who are aware of regulatory and compliance of existing and proposed oil and gas operations.
  2. Strive for continuous improvement:
    The performance of an organization, whether it is oil and gas companies or service company is determined by the competence of the workforce. And competence can be developed through lifelong learning and continually upgrading your skills.

Your ability to get the job done better, faster and how competent you are is what determines your participation in the East African oil and gas sector,

  1. Communication Skills
    Increased public consultation in the planning stages of the oil and gas projects will create demands for workers with strong consulting and communication skills to gather data and address key issues.

For example, the construction of LNG facilities or Oil and gas pipelines require broader consultation with local communities. That generates more demand for communication skills.

  1. Problem-Solving Ability:
    Your ability to gather data, use the information to come to identify key issues and come with solutions is crucial for employers in the oil and gas industry.

6.Professionalism and Strong work ethics:
This is the ability to be true and honest to yourself and others. This is when you admit your mistake and weakness.

7.Leadership skills:
This is your ability to take responsibility, volunteer assignments and perform at a higher level to achieve company goals without making an excuse.

 Final Words

The oil and gas industry and in Tanzania and East Africa is adopting changes. And for those who want to become part of it must do likewise. Because with all this change comes both opportunities and challenges for the oil and gas workers in Tanzania and East Africa

Three Trends Impacting Oil and Gas Workforce In Tanzania and East Africa

/in /by

  

The oil price crash of  2014 to 2016 have played a key role in the industry’s workforce restructuring.

Merger and acquisition have also impacted East African oil and gas workforce. The most recent announced merger and acquisition deal was the Indonesian company, Medco Energi’s $539m acquisition of Ophir Energy on May 2019.

Furthermore, on February 2016, 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.

These mergers and acquisition deals have significantly impacted the oil and gas workforce in Tanzania and East Africa.

Even as oil prices began to recover in 2017 and  2018, the industry remained focused on  managing costs, productivity, high performance  of the workforce and that is  expected to continue in 2020 and beyond.

This article examines the impact of key trends and brief analysis on how these trends will reshape the skills of the East African oil and gas industry in  2020 and beyond.

Let us face them.

  1. Technological advances leading to growth of new skills

Oil and gas companies are adopting new  technology  to lower cost, increase  productivity and improve operational efficiency. An increased use of measurement-while-drilling (MWD)  and logging-while-drilling (LWD) tools which collect data during the drilling process could improve drilling accuracy.

In addition to that, following the latest  technology in geophysical services (also known as seismic and data acquisition)  such as    pre-stack depth migration algorithm like Kirchhoff, Beam, Kirchhoff least square migration or RTM (Reversed Time Migration) could  help increasing the East African reserves volumetric calculations.

These types of technology  will create a need for workers with a background in geology, geophysics, reservoir engineering and well completion engineering  and Geosciences.

So if you are those companies that  don’t want to change the way that you develop and train your people to use new software and new technology in the oil and gas industry, You are going to be left behind.

  1.  Regulatory changes

With new regulations and the need for compliance, the oil and gas industry will require those with expertise in compliance and regulations such as regulatory professionals. Also, today’s oil and gas workers  must be aware of the regulatory and compliance of existing  and planned oil and gas projects.

  1. Construction employment tied up in oil and gas industry

The development of liquefied natural gas (LNG) facilities and oil and gas pipelines in East Africa creates needs for project leaders and  project managers and engineers

Although Tanzania is in the early-stage planning and development  of a new liquefied natural gas (LNG) export facility. This LNG  project  will have an increasing requirement for  project and construction managers, project engineers and regulatory professionals as well as the  expertise of expatriates  who have planned  and developed  LNG in other parts of the world

 Final Words

These trends have  long term impact on the oil and gas industry workforce and human capacity development frameworks in East Africa by adopting performance improvement mindset  across the industry and ensuring training programs offered  are directly linked to organizations goals, objectives and  visions.

To address challenges and opportunities in East Africa, local oil and gas industry requires  new arrays of skills, knowledge and expertise for workers. By realizing how the technology, financial constraints and market competition  is impacting our local oil and gas industry.

And if you are a regular reader of our articles, you know that  one of my biggest goals for Tanzania Petroleum is for us to become the knowledge body of East African oil and gas industry and raise the performance standards of work competence of Tanzania and East Africa oil and gas industry to become world-class and internationally competitive. So we address these challenges by developing and training professionals to improve their performance at work place, increase staff productivity and enhance business profitability.

Addressing Skills Shortage and Underperformance In East African Oil and Gas

/in /by

When we talk about the skills shortage, people think it refers to a lack of people willing to work in the oil and gas industry.

But this is only a challenge in some parts of the oil and gas producing world.

The oil and gas industry is attractive careers for East Africans

If you were a young man in Tanzania, Mozambique, Uganda, and East Africa, your whole family will be happy if you get a job in the oil and gas industry because they know it is prosperity, traveling the world, money and full blown medical insurance for them and the families.

Read also:

Is Swala Oil and Gas Driving Hard Towards 2020

Taking Training and Development in Tanzania’s Oil and Gas Beyond the Conventional Way

The skills shortage refers to a lack of enough skills, knowledge, and expertise to deliver higher productivity, innovation and performance standards needed.

The oil and gas industry is an industry in which operational safety, productivity, and performance are paramount.

What happens if we don’t have enough people to deliver the productivity and high-performance standard needed?

We are going to increase overall operation cost, we are going to delay productions and we are going to have a few local leaders of the oil and gas industry to shift the industrialization. And whole East African oil and gas industry will become less profitable.

Tanzania Petroleum is working on something to address this. One of my biggest goals of Tanzania petroleum is for us to be the knowledge body of the East African oil and gas industry, raise the performance standards of workforce competence of Tanzania and East African oil and gas industry to become world-class and internally competitive.

Is Swala Oil and Gas Driving Hard Towards 2020

/in /by

If Swala was a person, its nickname would be “The Survivor” for its ability to sustain itself during uncertain market conditions and remain active in Tanzania despite the global industry’s crash from 2014 to 2017.

Swala Oil and Gas (Tanzania) is another operator with drilling plan in Tanzania. We have been watching Swala’s development in Tanzania for almost five years now. And here we bring to you its Tanzanian projects. But before we go too far, let’s give you the company background, first.

Swala Oil and Gas (Tanzania) is an East African company focused on oil and gas exploration in the region. Swala was one of the early movers in Tanzania that took advantage of unexplored onshore oil blocks in the region.

Swala owns 75% interest of the Kilosa-Kilombero license. At kilosa-Kilombero, Swala has identified a prospect called Kito.

Read also:  Is Aminex Getting Ready To Supply the Much-Needed Gas In Tanzania

Kito has a lot of similarities with the Lokichar Basin in Kenya where Tullow has discovered massive oil reserves. Swala is committed to drilling one well in the Kilombero-Kilosa license in Morogoro region.

The drilling project of Kito-1 well has been frequently postponed. Originally planned for 2016, after the delay in obtaining permit, it was postponed to 2017. And last year, the drilling programs were postponed to Q4 2019.

In fact, Swala is keen on taking advantage of the economic developments happening in the country that drive gas demand growth in Tanzania.

In February 2018, at the company’s annual general meeting presentation, Swala’s Chief Executive Officer (CEO), David Mestres Ridge, says:

“Continued economic growth requires growth in delivered gas volumes and Swala is aiming to play a role in that continued economic development.”

         What was Expected of Swala in 2019

As you can see in the image below, 2019 was supposed to be a busy year for Swala Oil and Gas (Tanzania) PLC and it is expected to see that the drilling of Kito-1 well starts in 4Q 2019.

2019 Swala’s work program

Source: Swala company’s website

What the Future Holds for Swala

Our analysis is that, step by step, day by day, Swala is moving closer to the drilling event and becoming another gas producer in Tanzania meeting the ever-growing energy demand in the region.

We hope to witness Swala Oil and Gas (Tanzania) PLC announce the drilling programs of Kito-1 well as the company continues to remain active in Tanzania despite the global oil and gas industry downturn. Year 2020 could be the drilling year of the long awaited Kito-1 drilling project.

An Investor’s Guide to Tanzania downstream Petroleum Product Market

/in /by

Most people do not understand how the total oil and gas supply chain real works.

The oil and gas industry is divided into three sub-sectors: upstream, midstream and downstream sub-sector of the oil and gas industry.

The upstream portion of the industry is involved in finding areas with oil and gas resources. They get oil and natural gas out of the ground. They are often called exploration and production companies.

Midstream part is involved in the transportation and storage of oil and natural gas from the area they found them to where it can be refined and processed. And downstream segment covers everything from distributing and marketing of the oil and gas-related products.

. Overview of Tanzania’s downstream Petroleum Product Market

Tanzania downstream petroleum products market focuses on three main activities: importation, storage transportation, wholesale and retail distribution of petroleum products such as liquefied petroleum gas (LPG), lubricants, diesel, petrol, and kerosene.

Diesel is the top consumed petroleum products in Tanzania, this is because many economic activities such as transportation rely on this fuel.

According to the Energy Water and Utilities Regulatory Authority (EWURA), the consumption of diesel has increased by 7% percent in 2018.

However, the consumption of kerosene and heavy oil fuel is decreasing due to the alternative source for power generation such as natural gas.

Here are three main activities involved in the downstream petroleum sub sectors.

                      1. Importation

Natural gas is abundant in Tanzania. But the country does not produce oil, so it is a net importer of all petroleum products for the servicing of the economy. It is important to keep in mind that the region is only importing petroleum products and not crude oil because there are no refinery activities since 1999.

Most of oil marketing companies import petroleum products via port facilities of Dar es salaam. A portion of petroleum products are distributed to the local market, and the rest is distributed to the neighboring countries such mainly, Rwanda, Burundi, DRC Congo, and Uganda.

                                             2. Storage 

The next activity in the Tanzanian downstream sector is storage.

The storage facilities of petroleum products are owned by both oil marketing companies (OMCs) and Tanzania International Petroleum reserves Limited(previously, Tanzania Italian Petroleum Reserves limited TIPER).

For security purposes the ownership of storage depots have left to the hand of few oil marketing companies(OMCs).Interested oil marketing companies access the storage facilities through a hospitality agreement with depot owners.

                        

                                  3 Transportation

Transportation involves moving petroleum products from one place to another.

While there a variety of modes of transporting petroleum products such as pipelines, railways, and oceans.

But the most widely used mode of transportation petroleum product in Tanzania is through road

Technically speaking, the road is the most unsafe way to transport petroleum products, Transporting petroleum products may involve illegal activities such as mixing of petroleum products,

                                          Marketing Channels

In downstream sub-sector, two ways are used to get petroleum products to end-user customers

 1. Wholesale Activities

It involves buying petroleum products and sell to end-users such as power generation plants, industrial customers and factories, government agencies and trucking companies

2.Retail Activities                      

It involves buying bulk petroleum products such as diesel, kerosene, LPG, and lubricants and sell to final consumers through petrol stations or private shops.

                                Regulatory Frameworks

The oil and gas industry is very regulatory. And the regulator of Tanzania’s downstream sector is Energy Water and Utilities Regulatory Authority (EWURA),

For example, oil marketing companies company interested to run wholesale business must acquire a wholesale license from EWURA

                          Major Players in Tanzania’s Downstream Sub- Sector

Multinational oil marketing companies are leading Tanzania’s downstream sub-sector

According to the Energy Water and Utilities Regulatory Authority (EWURA), Oil marketing companies with the largest petroleum sales market share in the period of July 2017 to June 2018 are Oryx Energies (15.5%), Puma (14.4%), GBP (13.3%), Total (8.5%), Camel Oil (5.8%) and Moil (5.3%)). These firms dominating 62.9% of the market. 

Final Words

I believe “performance matter” in the oil and gas industry, So I dedicated to helping people and organizations improve their performance by both increases their productivity, maintain their competitive advantage and enhance the business profitability and ultimately make a greater impact and greater contribution: To their co-workers. To their clients. And to the community