Aminex to Divest Partial Stake in Tanzanian Asset

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Silhouette of workers at oil refinery

 

Aminex plc has reached an agreement with Solo Oil plc for the divestment of a 3.825 percent interest in the Kiliwani North Development License in Tanzania for a cash consideration of $2.16 million. As part of the deal, Solo will pay Aminex $500,000 upon signing a sales and purchase agreement. The balance is payable on or before April 30 2016, unless otherwise agreed between the parties. On completion of the agreement, required in 30 days, Aminex will hold a 51.75 percent operated interest in the license and Solo will hold a 10 percent interest. The KNDL contains the Kiliwani North 1 well, which is believed to contain 2C gross contingent resources of 28 billion cubic feet of gas

Tullow Oil Gives Kenya’s Oil and Gas Industry $ 150 Million Development Boost

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A worker at the Ngamia 1 oil rig in Turkana County

                    A worker at the Ngamia 1 oil rig in Turkana County

Kenya’s oil and gas industry received a boost after explorer Tullow Oil said it would spend part of the Sh15 billion ($150 million) earmarked for the region on local development, even as the firm reported losses.

 

Tullow Oil said Kenya and Uganda would benefit from the expenditure, which includes coming up with a plan on how resources in the two countries can best be developed into sellable commodities.

“The draft Field Development Plan was submitted to the government of Kenya in December and will inform discussions as we progress towards potential Final Investment Decision (FID) of both the Kenya and Uganda upstream development projects in 2017,” said the company when it released its end of year results.

Tullow reported losses of Sh102 billion ($1 billion) after tax for 2015 which is an improvement from a loss of Sh158 billion ($1.55 billion) posted the year before.

The falling price of oil on the international market has been the biggest contributor to the loss.

Oil prices are at the $30 (Sh3,052) per barrel level, which is a 12-year low and has discouraged investment in exploring new territories.

Currently Tullow is drilling the Cheptuket-1 well in Kerio Valley which should be completed by February as it works on how best to utilise its other resources.

In August last year the Kenyan and Ugandan governments agreed that a pipeline would be best suited to transport oil from northern Uganda and Tullow said concerned ministries in both countries are working on the development plan.

“These conditions, which include ensuring that this is the lowest cost route, are being worked on by both governments in conjunction with the Kenyan and Uganda upstream parties,” said the explorer.

Last year, oil firms in Uganda led by Total hinted that they preferred a pipeline going through Tanzania to one going through northern Kenya.

Tullow’s partner Africa Oil is also optimistic that prices of the crucial commodity will improve and has been raising funds for further exploration on its northern Kenya and Ethiopia blocks.

“We are very pleased to have completed the Kenyan portion of our farm-out to Maersk. We feel Maersk will be an excellent partner in terms of technical and financial strength and experience critical to moving the development project forward.

“This transaction puts Africa Oil in the enviable position of not requiring any additional equity financing prior to first oil and will allow us to weather the current difficult oil price environment should it continue into 2016,” said Africa Oil chief executive Keith Hill after the firm completed selling part of its interest to Maersk.

Africa Oil received $427 million (Sh44 billion) from Maersk after selling its stakes on its northern Kenya and Ethiopia blocks.

Drilling of Songosongo gas well in final stages

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SongoSongo_PAT_388_p500-350x233The tedious work of drilling new offshore natural gas well at the Songosongo Island’s gas field operated by the PanAfrican Energy Tanzania (PAET) Limited, comes to an end by the beginning of next week, the operators   confirmed.

PAET’s managing director David K. Roberts made the revelations before the permanent secretary of the Ministry of Energy and Minerals, Justine Ntaliwa, who made official visit of the gigantic gas project site on the Southern Tanzanian coast last week.
Roberts who was accompanied by the firm’s operations engineer Onestus Mujemula said the work on the new well named as SS12 and related workovers for three other wells is about to conclude the offshore phase of its development programme for the Songosongo gas field.
He said the new offshore well is an addition to three others which are operating to sum up to eight in total when included with four other onshore wells located inside the precious island.
He said the new well will have the capacity of producing 35 million cubic feet of gas on daily basis to supplement others that are producing a total of 94 million cubic feet on daily basis for domestic consumers.
Robert says the gas supply  to consumers per day does not match with the  entire   capacity of the wells’ capacity that can hit in excess of 170 million cubic feet.The production is impeded by the market’s prevailing demand. So far, only 94 million cubic feet of natural gas are pumped by the PAET into the national grid connected by a pipeline from Songosongo to Dar es Salaam, to cater for power generation of TANESCO turbines and other industrial consumers.
Tanzania Petroleum Development Corporation (TPDC) is doing the marketing of the gas and other related operations to boost supply.
Also present during the latest revelations made at the sight on the tiny but priceless Songosongo Island included PAET country chairman Patrick Rutabanzibwa, commercial manager   Bizimana Ntuyabaliwe, corporate affairs officer Jacqueline Kawishe,  Andrew Kashangaki, the corporate social responsibility  manager, members of the media, TPDC officials and other ministerial officials who accompanied the permanent secretary.
The operations engineer Mujemula said the construction of the new well would ease operations particularly when other wells will be scheduled for workovers and ad hoc services, one required.
Besides the drilling of the new offshore well, PAET has also been involved in workovers of the three other wells as move towards efficient gas production.  The wells named SS-5, SS-9 and SS-7 were suspended without halting steady flow of gas for the biggest consumer of the product, TANESCO and other industrial users.
The workovers and completion of the new well by next week would ensure PAET’s pivotal role in steady production and supply of the gas.
The ministry’s permanent secretary Ntaliwa hailed PAET operational team for the latest success that has ensured consumers an availability of gas to meet their demands. He said as Tanzania gears up to meet demand of power supply which is in excess of 1,000 MEGA watts, the gas production at Songosongo will keep investors enjoy peace of mind in terms of fuel availability to run turbines as well as the projected industrial revolution.
For the past 20 years, PanAfrican Energy has played a critical role in Tanzania’s ongoing shift from costly imported fuel oil to clean domestic natural gas, as well as an important role in the development of Tanzania’s industry.  Apart from producing natural gas from the Songosongo field, which is sold by the Tanzania Petroleum Development Corporation (“TPDC”) to Songas Limited (referred to as “Protected Gas”), PanAfrican Energy develops, produces and processes “Additional Gas” and has it transported through the Songas pipeline to Dar es Salaam. The net revenues from the sale of additional gas are shared between PanAfrican Energy and TPDC under a gas Production Sharing Agreement.
In 2014, PAET marked the 10th anniversary of the commencement of Songosongo gas production.  As Tanzania’s largest producer of natural gas at present, PAET supplies the gas that generates over 35% of the electricity provided by the national grid and fuels some 38 industrial business units in Dar es Salaam.

Kiliwani North Production to Start in Mid-Feb

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Silhouette of workers at oil refinery

Africa-focused junior oil firms Aminex and Solo Oil reported Monday that the Kiliwani North-1 well in Tanzania is set to start production last this month and the well is currently undergoing final well integrity testing.

Aminex has been told by the Tanzanian Petroleum Development Corporation to get the Kiliwani North-1 well ready for production to begin in mid-February. This follows on from the partners agreeing with the authorities in January on a gas price of $3.07 per thousand cubic feet, which will be linked to the US consumer price index.

Initial production rates will be managed to allow for testing and commissioning of the recently completed Songo Songo gas processing plant and related pipelines, while also recording critically important pressure and flow rate measurements to determine the optimal flow rate to maximize the life of the reservoir.

Aminex holds a 55.6-percent interest in the Kiliwani North Development Licence, while Solo retains a 6.2-percent holding.  Solo Chairman Neil Ritson commented in a company statement:

“Solo is delighted that the momentum of the Kiliwani North project is being maintained after the signing of the [gas sales agreement] and we anticipate being able to report first gas and receipt of first revenue in the coming months.

Read:The Ultimate Guide To Participate In Tanzanian Oil and Gas Sector

” The companies also said that a proposed agreement with Bowleven to farm out acreage in Tanzania, previously announced on Nov. 19 2015, will not now go ahead. As a consequence, Solo will retain its 25-percent stake in the Ruvuma Production Sharing Agreement, while Aminex will continue to hold its 75-percent interest.

Read Also:Reasons Why Many Tanzanians Eyieng Oil and Gas Jobs

Aminex CEO Jay Bhattacherjee commented: “The recent completion of the gas sales arrangements for the Kiliwani North field opens a new chapter for Aminex in Tanzania. With the commencement of first production from the Kiliwani North 1 well, we expect to book our first reserves in-country. The company continues to focus on appraising Ntorya where we have planned an exciting program prior to applying for a 25-year development license. Aminex is currently assessing alternative ways to monetize its gas in the Ruvuma PSA acreage, where we already have a commercial gas discovery at Ntorya-1, through an early production system. –

Bowleven walks away from $28m Tanzanian gas deal

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Workers walking at chemical plant

 

Edinburgh-based oil and gas explorer Bowleven has ditched plans to buy stakes in two Tanzania gas projects for up to $28 million (£19.6m).

The Africa-focused firm said in November that it had signed a conditional heads of terms with Aminex to buy a 25 per cent interest in the Kiliwani North Development Licence, which is soon to begin production, along with a 50 per cent interest in the “highly prospective” Ruvuma petroleum sharing agreement.

Also Read:The brighter Days Ahead For Tanzanian Oil and Gas Sector

At the time, Bowleven chief executive Kevin Hart said the purchase would have given the company “the opportunity to participate in highly attractive production and material appraisal/exploration assets without compromising its robust balance sheet and strong capital discipline”.

However, in a brief statement today, the Aim-quoted firm said that it had decided not to pursue its interest in the proposed acquisition of the stakes “following the completion of due diligence”.

Aminex added: “In discussions during the due diligence process, a forward work programme could not be agreed which would be acceptable to Aminex, its lender, the Tanzanian authorities and Solo Oil.”

Solo Oil has a 25 per cent interest in the Ruvuma scheme – with Aminex holding the remaining 75 per cent – and a 6.175 per cent stake in Kiliwani North, of which Aminex owns 55.575 per cent.

Bowleven last month told investors that was making good progress with an onshore development in Cameroon, where an extended flow testing programme at its Bomono permit – completed as part of plans to supply gas for a power scheme in the region – showed support for plans for an initial supply of about five to six million standard cubic feet of gas per day.

 

Uganda’s Oil Still Competitive Despite Global Oil Price Plunge

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A view of the main deck of Tullow Oil's newly completed Floating Production, Storage and Offloading vessel (FPSO) Prof. John Evans Atta Mills at Sembcorp Marine's Jurong Shipyard in Singapore January 20, 2016. REUTERS/Edgar Su

INTERVIEW

By Mark Keith Muhumuza

What have been your impressions of the Ugandan economy, so far?

Uganda has an economy that is growing fast. Uganda has one of the highest GDP growth rates in sub-Saharan Africa. I see a country that is progressing.

As far as oil sector is concerned, it is going to be a game changer for the country. All these things we talked about as developing the Ugandan economy have been without oil. The development of oil will then be a catalyst to take a major leap. It comes in addition to efforts made by government to develop infrastructure which is key to developing the resources. If you have the right infrastructure projects, it makes it easier to develop your resources. We’re impatient to get the oil out of the ground so that the country starts benefiting from the resource.

In your appointment, a statement issued by the company read that your task was “for preparing Total E&P Uganda’s operations in the Lake Albert basin during the transition from the exploration and appraisal phase to development phase.” How has this gone for you so far considering we are at the same stage of oil production as last year (the same period)?

We are discussing with the authorities and I think that they are committed to making sure that there is a lot of progress to reduce the time. The authorities are committed to reducing the delay and to facilitate the process. This is what I witnessed since I took my position. If that is done, the earlier we start the better. Discussions on field development plans are coming to a conclusion and we are confident that the production licences will be issued soon.

How soon is soon?

Soon I must say. You see, this business is a joint effort of the government and industry. I see an alignment in purpose. Both sides agree we must start production but there is a process. The government has to be convinced of what the industry is proposing. So, yes a lot of thoroughness has to go into this by the government to ensure that Ugandans benefit.

On our side, we are committed to continuing to work with the government to conclude the process. We all want to see this project start as soon as possible.

It is also important to recall we have had a major milestone in fiscal matters in July 2015 when the government granted the exemption of the VAT. This is a clear signal towards promoting the industry to invest.

Also, progress is being made on the studies concerning the route of the pipeline. All these steps are important to start the development phase.

In parallel, the government is also making efforts on infrastructure development to provide access to the Lake Albert area, which is also very important for the project.

Considering that you are managing a transition – appraisal to development -, what is your take on the waiting period for oil production licences?

The government is currently reviewing these applications. It is an interactive process which requires attention to detail considering the magnitude of the project, as well as constant communication with the Ministry of Energy to ensure that all inquiries pertaining to the Field Development Plans (FDPs) are addressed before production licences are awarded. Progress has been made and we are confident that the FDPs will be approved and production licences awarded soon.

Are you comfortable with the time it is taking for you get production licences?

In fairness, this is a process that is interactive in nature. We submitted a field development plan. The government will review it and ask questions. They will then get back to us and we’ll answer the questions. There will be a back and forth, and that is a normal process. At the end of the day, we submitted the addendum at the end of last year and they are going through it. There has to be clarity between what we put in the documents and the good understanding of the government.

Current global oil prices have meant companies have to adjust accordingly to cut costs. Uganda remains an integral part of Total’s operations and the insistence has been you are going nowhere at the moment. There is limited optimism globally around oil considering the low crude oil prices. In Uganda, this is coupled with limited activity but what keeps you going despite the fall in global oil prices and limited or no activity in the oil fields in Uganda?

As stated by our chairman and group CEO when he visited, to develop the resources in Uganda is the low-cost development. By development, I mean bringing the oil to the surface. Total remains committed to work towards producing the Ugandan oil resources as soon as possible because Uganda oil resources are potentially low-cost resources which will be competitive in the market.

Why is it competitive?

It is the cost of development. At the end of the day, it comes down to how much it costs you to produce a barrel. When you consider the resources used to produce oil in Uganda and compare to places that need deep off-shore facilities, it is not the same price. That is why it would still be competitive.

Does that then explain why you’re optimistic about the sector in Uganda because some have noted that the sector in gloomy right now?

The resources are there. Today, we are not talking about whether the resources are available. It is clear what the resources are and how to produce the resource, we know. So it is not about resource speculation. We continue to develop the oil chain in Uganda.

Total has been in Uganda for 60 years and is willing to developing its presence along the value chain in Uganda and be the partner of choice in the oil and gas sector.

Source

Despite oil glut, Tullow launches huge new deepwater production vessel

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Amid one of the deepest oil price crashes in history, Britain’s Tullow Oil (TLW.L) is sending one of the world’s biggest floating deep-water oil production platforms to West Africa to pump crude for at least 20 years.

The 340-metre long production vessel, named after late Ghanaian president Prof John Evans Atta Mills, was converted in Singapore from a Very Large Crude Carrier (VLCC) super-tanker, and is expected to set sail this weekend to Ghana, where it is scheduled to gradually ramp up production from the TEN deepwater oilfield from July/August this year, the company’s chief operating officer Paul McDade said on Thursday.

With costs (operating plus capital expenditure) of around $20 per barrel and an expected production life of 20 years or more, London-listed and Africa-focused Tullow hopes it can weather a storm which has seen crude prices LCOc1 tumble over 70 percent in 18 months to around $30 per barrel. [O/R]

Despite its low production costs, McDade said the current downturn was causing the industry huge pain, and he added that he did not expect a sharp rise in oil prices as happened in 2009 after the last crash during the global financial crisis.

“It feels more like a 1986 than a 2008. It’s a more fundamental shift. 2008 was a financial crisis, today is very different. We have oversupply, that’s structural and takes longer to adjust to,” he said, referring to low oil prices in the decade following the price crash of 1986.

Despite the outlook for excessive global output, McDade said the John Evans Atta Mills Floating Production, Storage and Offloading (FPSO) vessel was going ahead as scheduled.

“We are very much on schedule for a July/August gradual start of production. The aim is to hit peak production in early 2017,” McDade told Reuters in Singapore.

The TEN oilfield off the coast of Ghana lies at a water depth of 1,000-2,000 metres and has a maximum capacity to produce 80,000 barrels per day (bpd) of a light sweet crude quality close to Brent, and Tullow plans to operate at full production.

Tullow already produces similar grade crude from the offshore Jubilee oilfield, also in Ghana, and the company said once TEN was at full production, combined net output from West Africa would reach 100,000 bpd in early 2017.

In the midst of a huge global production overhang, with 1-2 million barrels of crude pumped every day in excess of demand, West Africa is one of the few regions that is expected to see production increases and further investment this year.

Analysts at AB Bernstein said they expected “Africa … as the most active basin in 2016”, in terms of developments and investments of potential offshore projects.

“In Ghana, we’re kind of blessed with high quality, low cost assets,” McDade said.

He said that Tullow’s overall cash operating costs were around $15 per barrel.

TAKE-OVER TARGET?

Because of the low prices, McDade said Tullow would have to be flexible with its next investment decisions, including expansion of the Jubilee field, which Bernstein estimated to see a final investment decision (FiD) in the second quarter of 2016.

The plunge in crude prices has already thrown several oil and gas projects off track. Energy consultancy Wood Mackenzie estimates projects worth $170 billion would be deferred or cancelled between 2016 and 2020, bringing the total since 2014 to $380 billion.

Barclays has said it expects global spending on exploration and production to fall by 15-20 percent this year, after already declining in 2015, noting it would be the first time spending will fall in consecutive years since 1986/87.

Tullow’s McDade said the firm would only develop its East African oil assets in Uganda if it managed to farm out a significant part of its production in order to re-invest the money made from such a sale back into those developments.

“Ideally, you’d want to invest in the current environment as services are cheap and likely to become cheaper still. In the last 8-10 years we may not have seen a better time to invest than now,” McDade said, but added this would depend on Tullow’s financial and equity position.

Tullow’s share price has fallen by around 70 percent over the last year, giving the company a market capitalization of 1.18 billion pounds ($1.68 billion).

The firm’s low share price and market capitalisation meant that Tullow was potentially a take-over target.

“As a smaller company, you’re always going to be a take-over target,” he said, but added that Tullow was not up for sale and warned any bid would also be challenging as its partnerships in Africa would entail clearances from regional governments.

(Editing by David Evans and Himani Sarkar)

Information Gap: Lesson From Ghanaian Oil Sector

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boat-on-liffey

After joining the league of oil producing nations, Ghana’s uphill task was to manage the high expectation that suddenly oil discovery holds the panacea for the country problems— from unemployment to more revenue translating to huge economic gains.

The high expectations were as a result of the unavailability of information to Ghanaians and even prospective industry players on the industry.

The celebration that characterised the announcement of the discovery of oil in commercial quantities in 2007 is today making things worse as people still asked the question “where is the oil money.”

The announcement of millions of barrels oil find in 2007 flung the nation into a state of ecstasy when politicians and other state officials highlighted the economic salvation that the oil find was likely to bring.

Among them was the pronouncement of former President John Agyekum Kufuor, in his interview with the foreign press, that Ghana would become an ‘African Tiger’ and the discovery would make the country ‘fly’ by giving it the needed boost to improve its economy drastically.

President Kufuor further emphasised the monetary value of oil and stated that the money was needed to build schools, roads and hospitals.

In the run-up to the 2008 elections, the major political parties all made big promises targeted at the burgeoning petrochemical industry in the Western Region. Key promises were made regarding the creation of jobs through the establishing of petrochemical, fertiliser and liquefied petroleum gas industries.

Almost a decade

On the back of these high expectations, triggered by speculative pronouncements almost a decade after the discovery and production gave many Ghanaians a false hope.

Benchmark revenue dipped, transfers to the holding funds also dipped, which triggered the depletion of the Stabilisation Fund.

In the oil and gas sector, having all Ghanaians on the same page is essential to a highly efficient stakeholder engagement.

Though the Petroleum Revenue Management Act 815, 2011 provides that for the purposes of accountability and transparency, petroleum receipts, in whatever form, shall be published in the Gazette and at least two state own newspapers within 30 calendar days after the end of applicable quarter.

The Act went further to state that the Minister of Petroleum shall publish the total petroleum output lifted, and the reference price in the same manner online, which seems to be the perfect steps towards holistic governance principles on the part of the agent (government) towards the shareholders (people of Ghana).

If what is published per the dictates of the Act and a large number of Ghanaians are unaware of key information due to technicalities, they would be unable to see the benefits of the industry and the dynamics of price hike and its dips.

However, in upholding the rules prescribed in the Act, there seem to be what we call short-termism or the tendency to foreshorten the information horizon applied to investment decision.

The people of Ghana, who are the resource owners, are faced with the reduction in shareholders’ welfare and also incur agency cost which arise as a result of the shareholders attempt to monitor and know what is going in the industry.

Bridging the gap

Publishing of total petroleum receipts, lifting and the reference price on the website of the Ministry of Finance will be difficult to digest by majority of people of Ghana.

For all to appreciate what comes in as petroleum revenue and mode of disbursement, in accordance to Article 36 of the 1992 Constitution, there is the need for bridging the information gap.

Information about the industry needs to be brought down to level of the trader at the market who does not understand what is published on the website of the Ministry of Finance.

For instance, oil companies in Tanzania and the government translate the contents to Swahili and other dominant local languages for people to appreciate the trends.

In the condition of an ‘ideal speech’ situation, managers of the funds or revenue from the oil and gas sector must work towards a common goal.

The process should be devoid of technical presentations, and all the stakeholders should be on the same page.

The celebration of oil

It is important to note that Ghanaians are aware of the lapses in the issues of the extractive sector from the days of gold, timber, bauxite and manganese, and it is, therefore, critical to ensure education to raise consciousness to encourage mutual disclosures between government through critical and healthy debate.

That will ensure understanding, rather than mere words that will not bring transformation.

The Act is expected to provide the framework for the collection, allocation and management of the revenue in a responsible, transparent, accountable and sustainable manner for the benefit of the citizenry.

It is good that Ghana took steps ahead of many nations to put in place a Petroleum Revenue Management Act.

However, there is the need to do more to ensure an enhanced reporting system since reporting the petroleum receipts are not enough, but must go with corresponding sustainability reporting to provide stakeholders with additional information.

It is, therefore, important to ensure free flow of accurate information about the petroleum receipts and expenditure instead of allowing politicians to tell the electorate the embellished truth skewed for political

Oil and Gas: An Open Letter To Mr President John Pombe Magufuli

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TANZANIA MINES GAS/ENERGY AND OIL FORUM (TMGOF)
Media Department

TANZANIA MINES GAS AND OIL COMPANY LTD (TMGOL)
Registered Company

TMGOFLOGO_LARGE

TMGOF Centre of Extracts of Information for Extractive Industry
and
TMGOL Sponsor of Tomorrow in tapping Local Content Opportuniti

Dear

Mr. President John Pombe Magufuli

OPEN LETTER TO MR. PRESIDENT JOHN POMBE MAGUFULI
( CONCERNING OIL AND GAS )

Dear Mr. President Magufuli, Tanzania Mines, Gas and Oil Co. Ltd are 100% Tanzanian company with its own forum called Tanzania Mines, Gas/Energy and Oil Forum. Our mission is to promote our natural resources by organizing oil, gas and mines conference & Exhibition with the aim of being the sponsor of tomorrow economy in our country for the intention of tapping local content opportunities.

Mr. President you have demonstrated revered leadership in standing up for all Tanzanian. In moderation, I believe smart people, strategic plan can help us measure our progress in oil and gas sector today and in near future.

Mr. President in this Open letter I would like to share with you the story about the leader of a Middle Eastern nation was given a global competitiveness report showing that his country, despite being a major oil exporter, ranked very low in terms of global competitiveness. Investors were simply not prepared to invest in his country, except for a few dodgy characters. Foreign currency reserves were low, and young people were unemployed and roaming the streets.

First, he called in some senior politicians and asked what they thought of the report. Some said it was a hoax designed to embarrass the country. Others said it was the work of their enemies who wanted to steal their oil. Yet others said it was simply not true.

Then the leader quietly called one of the country’s leading business leaders. “Your Highness, do you really want to know the truth?” the man asked.  After listening to the business leader, the ruler of the country asked him to make recommendations to correct the situation. Using this “data,” they made bold changes to the laws of their country. Some laws in place for generations were simply repealed. The ruler retrained or removed civil servants and other regulators who were hostile to business and investment.

Mr. President you will be taking crucial decisions on the future of Tanzania in Oil and Gas for the benefit of Tanzanian and by considering climate change. Making the right choices now is critical to developing a policy that protects the climate and give chance Tanzanian to invest in oil and gas.

We would like to share with you some points that, we believe, will help in reaching such important decisions:

  1. There is the need for the TANZANIAN OIL & GAS SERVICE COUNCIL to represent the interests of Oil and Gas Service Providers in Tanzania with key mission to promote the capabilities of the Tanzanian Service Providers and showcase Tanzania as the regional hub for the Oil & Gas Industry. To achieve that, any policy should strive for technology neutrality and should phase out subsidies.
  • There is need to have country website and center unit for Oil and Gas which will help local investors to get all information in one place which will be under TANZANIAN OIL & GAS SERVICE COUNCIL. We believe this Council will run its activities independent without depend much in government fund.
  1. Choose one target and keep as the policy’s cornerstone. This Council may be one of the last chances to reconsider targets. This would be a significant step towards ensuring that gas plays a meaningful role in electricity production.
  • Gas emits roughly half the CO2 of coal: by taking one simple step policy – when calculating the emissions for the proposed natural gas power plants, please make the total as accurate as possible by including all emission sources — including those from natural gas extraction, production, processing, compression and delivery.
  1. Recognize the critical role that natural gas has to play in keeping the lights on: the more intermittent renewable energy comes on-stream, the greater the requirement for other energy sources which are capable of balancing them and guarding against a deterioration of supply security. Gas power plants are the best option available: they are reliable and flexible and in securing energy supply to keep citizens warm. With a fully integrated internal energy market, gas would be able to move freely throughout the Tanzania, improve Tanzania’s security of supply and contribute to greater energy efficiency.
  1. Recognize the contribution local of company and investors. There is the need for local investors to invest in this new sector whether by themselves or government support considering the factors of the country being powerfully economically.
  1. Support and facilitate more oil and gas exploration in Tanzania.
  • Tanzania still holds significant potential country in East Africa for this new sector of Oil and Gas: Current conditions have seen TPDC exploration activities with the good initiative to develop our country in this new sector.
  • To develop that untapped potential, we need predictable national fiscal and regulatory frameworks. While we should avoid unnecessary legislation, policies encouraging the role of oil and gas in the future Tanzania energy mix can help to trigger more investment – for the benefit of Tanzania’s security of supply, industrial competitiveness and economic growth.

We hope that these few points will help to enrich the discussion. We believe that they would move the Tanzania closer to reaching its goals, without drifting us & local investors away from the objective of a prosperous and sustainable. My team and I remain at your disposal for any further clarification you may want on any of these issues.

Respectfully,

Peter S. Hermes
Managing Director
Tanzania Mines, Gas/Energy and Oil Forum
Reg No: 114957
Email: peter.stephen@aiesec.net
Mobile: +255-755-503612
Website: www.tmgof.or.tz
Extension Media: www.tanzaniapetroleum.com

Cc:

Permanent Secretary
Ministry Of Energy and Minerals
P.O.Box 2000
DSM

 

Managing Director
Tanzania Petroleum Development Cooperation
P.O.Box 2000
DSM

 

Chairman of the TMGOL Board
Tanzania Mines, Gas and Oil Company Ltd
P.O.Box 54446
DSM

DOWNLOAD BELOW COPY FOR FREE PRINT

OPEN LETTER TO MR. PRESIDENT

Delays in Mnazi Bay gas supplied to be resolved in Q1-2016

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MNAZI BAY

Wenthworth, an East Africa-focussed oil and gas company, anticipates that all of the power plant projects in Tanzania that utilize utilise Mnazi Bay gas for the generation of electricity will become fully operational during the first quarter of this year. This includes the $1.3 billion Mtwara gas power project (400 MW) that is backed by the US President’s ‘Power Africa Initiative’.

Admitting delays in gas production in Q4-2015, Wenthworth stressed that gas supplies are now being ramped up. The AIM-listed company in September 2014 agreed with the Tanzanian government to deliver up to 130 mmcf/day of gas from the Mnazi Bay concession to the new state-owned, transnational pipeline with initial volumes in Q3-2015.

At present, gross gas production into the pipeline averages 46 million cubic feet per day (MMcbf/d), with production meant to rise to 55 MMcbt/d before the end of this year.

Delays in gas supply pushed back the commissioning dates of the Kinyerezi power plant and the conversion of the Ubungo plant. It also impacts the much-observed Mtwara plant, to be realised through a public-private partnership between Symbion Power and Tanzania Electric Supply Company (TANESCO). Construction is due to start this spring year for the plant to be commissioned as early as 2018.

Wenthworth says these delays “are expected to be short-term” so all gas-to-power plant depending on Mnazi Bay gas supply should get enough fuel to start full commercial operation in Q1-2016. Gas production at the concession, in south-eastern Tanzania bordering the Ruvuma River, are anticipated to reach 70-80 MMcbf/day in the first quarter of this year and to remain around this range thereafter.

Aspirations to close power deficit this year

Tanzania is at the brink of an energy crisis. Independent power producers such as Sonagas have repeatedly called on the national grid operator TANESCO to settle outstanding debts and pay them on time for the provision of contracted electricity to the grid. Otherwise, Sonagas may opt to gradually suspend operations at its Ubungo power plant.

Technical experts at TANESCO warned of an imminent power crisis due to rising operational costs during the winter season. The state-owned utility is allegedly operating at a loss since domestic electricity tariffs were lowered in February 2015, as it covers part of its oil and gas needs through costly imports.

Peak power demand currently is merely 900 MW, as many regions only sparsely electrified. Just 24% of Tanzania’s population of 45 million people is connected to the power grid, but the government wants to increase this share to 30% this year

The East African nation can currently draw on 1,490 MW of installed capacity – though much of this is temporarily lying idle – but the National Five-Year Development Plan foresees a target of 2,780 MW by end-2016. Trying to stay optimistic, the government suggested it would be possible to close the 1,290 MW generating capacity deficit.

To improve gas supplies to existing gas power plants, the government in mid-2015 freed up $1.2 billion (Tsh.2.4 trillion) that is partly used to build a gas pipeline from Mtwara to Dar es Salaam while the remainder goes towards the construction of a power plant at Kinyerezi in Dar