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Energy Boardroom recently releases a new report on the Oil and Gas sector in Tanzania, ‘Inside Oil & Gas Tanzania’.

Huge 55tcf gas discoveries have turned Tanzania from what was once an oft overlooked backwater in terms of hydrocarbons investment into one of the hottest properties in global energy. Multinationals are now jostling for position to capitalize on the wealth of opportunities in the country.

The report is an authoritative and up-to-date assessment of the major sector in this strategically important oil and gas producing country. Themes covered include

  • Tanzania in East Africa

Neighboring Mozambique and Kenya also possess the potential to develop into regional energy heavyweights. We assess Tanzania’s strengths and weaknesses compared to its East African neighbors and the importance of the contract to transport landlocked Uganda’s oil to the coast.

  • LNG: A Game Changer?

After years of bureaucratic delays, Tanzania is finally poised to build an LNG plant in the Southern port of Lindi and begin to capitalize on its gas reserves through export to international markets. We take a detailed look at this project and its potential to transform Tanzania.

  • Regulatory Reform

2015 was a big year for Tanzanian oil and gas, with the election of President John Magufuli and the roll-out of the Tanzania Petroleum Act. We assess the impact of Magufuli’s early tenure on the industry and introduce the reformed constellation of actors created by the new legislation.

  • The Big Scramble

Our in-depth cover story, ‘Braced for the Big Scramble’ examines the international oil and gas operators, large and small, making moves in Tanzanian oil and gas. We look at their respective strategies, successes, and failures, to paint a detailed picture of the opportunities in Tanzania.

Energy Boardroom‘s Tanzania Oil & Gas Report features in-depth interviews with:

  • James Mataragio, TPDC
  • Jamidu Katima, EWURA
  • Øystein Michelsen, Statoil
  • Neil Ritson, Solo Oil
  • Salim Bashir, KPMG

Quotes

“We have, to date, barely explored half of the country, yet from what we have witnessed so far, the potential is absolutely enormous”

  • James Mataragio, TPDC

“We are witnessing the dawn of a brave new economic trajectory for our country. There is much to be optimistic about. The future of the Tanzanian oil and gas industry is unquestionably bright!”

  • Jamidu Katima, EWURA

“[The LNG plant project in Lindi] is emblematic of the dawning of a new era in East African gas and of the resolve to make Tanzania an important player in the gas space.”

  • Øystein Michelsen, Statoil

“There’s a real race underway to become Africa’s newest LNG exporter and each side is on the lookout for any possible advantage they can gain.”

  • Ronke Luke, Oilprice

Download

Download the report at http://www.energyboardroom.com/oil_and_gas_report/tanzania-inside-oil-gas-report and visit energyboardroom.com for up-to-date reports, news, articles, interviews, and facts and figures from a wide range of global oil and gas markets.

SOURCE Energyboardroom

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Swala Energy has announced that its subsidiary Swala Oil and Gas (Tanzania) Plc and Tata Petrodyne Limited (TPL) have finalised the outstanding terms of their farmout agreement for the Kilosa-Kilombero and Pangani licences in Tanzania.

Following by the finalization the parties shall now proceed to payment of the reimbursable past costs of US$5.7 million, due within five working days from Completion, and to the transfer of licence working interest to TPL.

Upon completion of the transaction, the equity in the licences shall be:

Swala Tanzania

According to Swala CEO Dr. David Mestres Ridgethis development allows Swala Energy to now focus on preparations for the 2016 drilling campaign

swala Tanzania seismic map“We are grateful to the Tanzanian authorities and regulators for their assistance and prompt handling of the approval process for our farm-in application, which allows TPL to join us on the two Tanzanian licences. Knowing that reimbursement of the past costs incurred by the Company is being made and having an international exploration company such as TPL as a participant in an exciting location in the East Africa Rift system allows us to now focus on preparations for the 2016 drilling campaign,” Dr. David Mestres Ridge, Swala CEO, said.

Swala Energy Limited has received a no objection notice from the Tanzanian Ministry of Energy and Mines to the farm-out of 50% of its interests in the Kilosa-Kilombero and Pangani licences to Tata Petrodyne Limited (TPL).

Currently the Australian explorer is serving a one year extension on each of its licenses by the Tanzanian Ministry of Energy and Mining (MEM) within which an exploration well must be drilled in each of the Kilosa Kilombero and Pangani licences in Tanzania to the 20th February 2017.

 

 

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THE low price of oil has dashed initial high hopes for oil and gas investment in Africa, but governments have the opportunity to turn things around.

The discovery of oil off the coast of Ghana in 2007 — and subsequent hydrocarbon finds in Uganda, Kenya, Tanzania and Mozambique — sparked an exuberant international response, with oil and gas investors and companies initially flocking to what many saw as a new frontier for the industry.

The excitement was understandable. The oil and gas finds in Mozambique had the potential to increase its gross domestic product GDP) fivefold by 2040. Ghana’s economy was also being transformed. Prices were booming and the “Africa Rising” narrative was taking hold across the world, with rising consumption and improved political stability changing investor perceptions.

Eight years on, with the oil price halved to below $50 a barrel, the enthusiasm of those early days looks a little euphoric. While there have been significant successes in oil and gas exploration in Africa, the overall pace of oil and gas investment still lags behind other destinations.

The cost of infrastructure and evolving local regulation often makes for a more uncertain investment in Africa, compared with other markets that have been operating for decades.

Rules requiring the inclusion of local companies and workers in oil and gas supply chains are positive for long-term economic development, but mean more upfront investment in the transfer of knowledge and skills.

Meanwhile, Africa’s above-ground risks, such as political complexity, insecurity, fiscal instability and regulatory changes are often higher than those found in markets with established oil and gas sectors.

Taxation and regulatory frameworks take time to establish in new oil markets and can potentially be seen as a risk by investors. When the oil price is high and capital abundant, investors are able to balance these risks with the potential returns.

However, at lower oil prices, investors look for lower-risk oil and gas markets – another factor counting against Africa.

Currently, we are seeing evidence of investment flows in oil and gas being pulled back towards North America as the competition for capital within the sector becomes more acute.

Meanwhile, as investors chase safe returns, Africa’s oil and gas sector increasingly has to compete for investment dollars with other sectors of the economy, such as the fast growing consumer market or technology sector. As a result, the oil and gas sector lacks capital at a time when, ironically, investment capital has never been so available.

The current low oil price is an opportunity for Africa to review the relationship between host governments and oil and gas investors and for African governments to do all they can to make the investment opportunities as investor-friendly as possible.

When prices were at $100 a barrel, some governments (particularly those new to oil), ran the risk of being lulled into a false sense of empowerment. They assumed they had the upper hand in negotiating inward investment.

Today, however, with lower oil prices and with competitive investment alternatives available in Africa and beyond, we are seeing an increased level of pragmatism on the part of some governments and policy makers. Public sector leaders and influencers are beginning to understand the importance for projects to go ahead, and go ahead as soon as possible.

Experience is everything. Having seen both the peaks and troughs of oil prices, African governments are more likely to introduce investment-friendly policies, regulations and incentives, which could boost the growth potential of the oil and gas sector.

Through my various conversations with governments across Africa, I am encouraged by a growing understanding of the need to create a more collaborative and investment-friendly environment.

This is the fourth oil price slump I have witnessed in my career. The timing of the recovery is unclear, but when it does happen and the dust settles, the winners will be those countries that were able to attract investment dollars despite the downturn. The losers will be inflexible countries that stick to the old rules of the $100 a barrel world.

Africa can use this time to secure itself a position among the winners by creating a robust investment environment and thus avoid the feast and famine scenario that all too often accompanies oil price cycles.

Tims is MD of Standard Chartered Bank’s oil and gas industry team




Few weeks ago i got  the text from Tanzanian  who
is studying Petroleum engineering in among  of university in China, He was curious to know  about the
employment opportunity in natural gas sector in Tanzania? And this is why  i am writing this article.

You know many people believe the
discovery of natural gas could give Tanzanians millions of job opportunities,
they think, their sons, relatives or themselves can be  employed in 
natural gas industry.This  is definetly  untrue. So to day, this article    will clear up  this 
common misconception
Oil and gas sector is highly capital
intensive industry with risky operations. And Due to the investment of high
capital, the oil companies do not prefer to have a large number of employee in
order  to make reasonable profit. In the currently
findings released by Twaweza organization in a research brief tittled “Great
expectation citizens views on the gas sector” shows that, average citizens
expect four millon job opportunities from natural gas industry. Their expectation
 is beyond of the real situation. Tanzanians can find an example of country like Norway, though of its massive discovery of natural resources,  they  have only 240,000  employee  in their  gas sector. 

You can imagine, Tanzanians expect four millions job in gas sector while Norwagians who currently employed in gas sector is only 240,000. I hope you will agree with me that, the perception of many Tanzanian citizen to get job in gas sector is unrealistic. 
MY FINAL WORDS
 Citizen might be be
employed in this sector, but is not at large number  as many citizens
believe, few people they could get employment and not many of them. This is
the right time for Tanzanians to be aware on this particular matter.

TRANSPORTATION of natural gas from
Madimba in Mtwara to Kinyerezi I Power Plant in Dar es Salaam will start
early next month after completion of the construction of the
542-kilometre natural gas pipeline project.
According to the Minister for Energy and
Minerals, Mr George Simbachawene, the transportation of natural gas
will save over 1 1.6tri/- per year currently spent on importation of
fuel for electricity generation.
The pipeline will have an installed
capacity of transporting 784 million standard cubic feet daily, a volume
which can generate over 2,000 megawatts (MW) of electricity, including
the 300MW plant at Mnazi Bay.
Mr Simbachawene noted that upon
completion of the infrastructures, the project would see the country
getting reliable electricity supply, expansion and increase of
industrial production, cleaner environment and employment creation.
The Minister made his remarks yesterday
in Dar es Salaam after he visited Kinyerezi 1 Power Plant to inspect the
progress of the implementation of the project carried out by
contractors, TANESCO as well as Tanzania Petroleum Development
Corporation (TPDC).
He urged Tanzanians to be patient as
TANESCO will cut off electricity where repairs will be done so as to
ensure the availability of gas electricity in most parts of the country.
He stressed that the availability of
natural gas will help reduce the use of water where in some of the
hydroelectric dams that have slowed down production due to climate
change and environmental degradation.
Kinyerezi I Power Plant, Eng John Mageni noted that two out of four machines are complete and will produce 220Kv of electricity.
“The machines are currently on a test
run and within two weeks will be complete,” said Eng Mageni adding that
by early September this year, natural gas from Mtwara will be available
at the plant ready to be distributed to various sub stations including
the national grid.
In a related development, TANESCO
Managing Director, Eng Felchesmi Mramba said when Kinyerezi 1 Power
Plant kicks off, the company would significantly reduce the cost of
power supply.

He added that 150MW are expected to be
produced after the completion of the construction of Kinyerezi 1
Electricity Power Plant, a step towards the execution of the
government’s aim of adding electricity capacity on the national grid.


CGG announced  that it has been awarded a contract by the
Tanzanian Petroleum Development Corporation (TPDC) to acquire
high-resolution gravity gradiometry and aeromagnetic data over two
onshore areas along the South-Eastern Tanzanian Coastal Basin and the
eastern arm of the East African Rift.
Acquisition over a total area of 30,000 sq km will commence in mid
August 2015 and is scheduled to last up to two months. Using the
industry’s lowest noise Gravity Gradiometry, FALCON®, CGG
will deliver high-resolution data and interpretation to help evaluate
the hydrocarbon potential of these basins ahead of future licensing
rounds.
Tanzania has already established itself as a highly prospective
hydrocarbon province in East Africa with a series of significant
discoveries offshore and CGG is excited to be part of this next phase of
TPDC’s exploration of the onshore basins. This survey will benefit from
the experience gained through the completion of many projects
throughout Africa using the most advanced technologies available in the
industry.
Greg Paleolog, Senior Vice President, CGG Multi-Physics, said: “CGG
is delighted to work with TPDC to improve understanding of the structure
of these basins and to assist in the identification of suitable areas
for future seismic acquisition. With the selection of our FALCON
service, we can ensure that TPDC and potential operators will have the
best quality data and interpretation products ahead of the proposed
licensing round.”
“We know that there have been significant discoveries in the Kenyan
and Ugandan parts of the Rift Valley, and there may well be undiscovered
oil or gas reserves on Tanzania’s side,” Dr. Mataragio, the Managing
Director of TPDC explains. “The two-month-long basic Airborne Gravity
Gradiometer survey is imperative given the significant reserves
discovered in similar geological settings in Kenya and Uganda. The
promotion of our blocks is part of TPDC’s core business and this
exploration effort will add value and attract investors.”
Early this month the Parliament of the United Republic of Tanzania
passed a new Petroleum Bill, which will be signed soon. Under the new
Petroleum Bill, TPDC is now lawfully recognized as a National Oil
Company (NOC). The NOC will participate fully in exploration and
production of oil and gas and this campaign in particular signifies the
commercial commencement of NOC in E&P activities in Tanzania.

Dar es Salaam: The Controller and Auditor (CAG) will carry a special audit on oil and gas industry.
CAG Mussa Assad said citizens from areas with gas and oil should benefit from companies operating in their locales.
“This sector [oil and gas] is very crucial,” he said, adding “we will make sure they are controlled accordingly to give to the society what it really deserves.”
Assad said his office might fail to compete auditing in some offices following budget deficit.
Despite receive less from treasury; the CAG remains adamant that his office will execute its duties.
“With the little we have we will make sure we implement fruitful projects which will benefit citizen but we will not be able to finish all of projects.”
For this fiscal year the CAG office were scheduled to receive TZS 86 billion but only received TZS 76 an amount which will not be enough for all projects set for this year.
Licensing of petroleum exploration blocks, is governed by the
Petroleum (Exploration and Production) Act Chapter 308 of the Laws of
Kenya. All contracts are based on a Model Production Sharing Contract
(PSC) issued as a schedule to the Regulations issued under Section 6 of
the Act.
The signed Production Sharing Contracts have the following key component:
a) Signature Bonus: This is a one-off fee payable to
the Government by the Company upon signing of an oil exploration
contract. It depends on the area of the Block and previous data acquired
on the Block. Signature Bonus negotiation came into effect in 2009. In
block 12B for example the signature bonus paid was $300,000 according to
JV partner Australian Swala Energy. In block L27 operated by CAMAC
Energy the signature bonus paid was $310,000 according to the PSC available on this website.
A surface fee is also payable and is calculated on
the basis of the surface area of the Contract Area on the date those
payments are due. In Block L27 the amount set is $5 per square kilometre
per annum during the Initial Exploration Period, $10 per square
kilometre per annum during the first Exploration Period, $15 per square
kilometre per annum during the second Exploration Period and $100.00 per
square kilometre per annum during the Development and Production
Periods
b) Work programme and expenditure: The contractor
guarantees the agreed work programme and minimum expenditure. Initially
this was pegged at 15% bank guarantee and 85% parent company guarantee.
However, the Ministry has improved this and now the newly licensed
companies are required to provide a 50% bank guarantee and 50% parent
company guarantee.
This is to make sure that the companies proceed with their work
progamme expeditiously as agreed with the Government and that incase of
non-performance, the Government can liquidate the guarantees more
easily. For small companies (based on their annual turnover criteria),
they are required to post 100% bank guarantee. It is important to note
that upstream petroleum operations are capital intensive and the
Government entirely relies on the oil companies to invest their risk
capital in the operations.
In addition, this risk capital is raised through equity. This is
contrary to investment in mid stream and downstream petroleum segments
which can be funded by debt
c) Cost oil: This is usually the negotiated
percentage of total crude produced for recouping of investment costs
incurred by the contractor in exploration and production of oil in a
given field. It is normally up to 60% of all the oil produced in a field
for about five years.
d) Profit oil: This is the remaining oil after
deducting cost oil and is shared between the Government and the
contractor. For example, when a field is small the Government take is
50%. As the production increases, the Government take can increase up to
78% of the total profit oil.
e) Windfall profit: Where oil prices are higher than
the negotiated threshold, the Government creams off contractors take
above the threshold crude oil prices by 26%.
f) Exploration phases – there are three exploration
phases of two years each, the initial period, first additional period
and second additional period. For ultra deep offshore blocks, the
initial period is extended to three years due to extra logistical
challenges in the deep water acreage.
g) Relinquishment – is 25% of the area of the block for each period
The PSC also has the license rental fee and training fee included. In
Block 12B for example the license rental fee is set at $40,000 during
the first year (2012-2013) and $80,000 during the second year, training
fee is $100,000 per annum. During the first production phase the
training fee is set at a minimum of $200,000 in Block 1 PSC with Lion
Petroleum.
Check out PSC’s for the various East African countries namely Kenya, Uganda, Tanzania, Mozambique available on our website.
Additional Source: Ministry of Energy & Petroleum Website