Tanzania: More firms jet into Dar for oil deals

The number of oil exploration companies coming to Tanzania have doubled, the highest since the oil search begun 50 years ago. In the last two weeks alone, two more agreements were signed bringing the number of companies searching for oil to nine  with 16 Petroleum Sharing Agreements (PSA) signed.    

Discussions are in the  final stages with Statoil of Norway for deep-sea and Tullow Oil of United Kingdom for Lake Tanganyika explorations, while 16 companies are battling it out for two remaining offshore blocks in the Indian Ocean.   

Mr. Nazir Karamagi, the energy and minerals minister said last week that oil and gas exploration is capital intensive, risky and long term investment and is not an easy task to attract such investment in a country where no discoveries have been made.

“However, I am glad to note that the number of foreign exploration companies showing interest to come to invest in Tanzania is growing fast,” Mr. Karamagi said.

Last week the Ministry and Tanzania Petroleum Development Corporation (TPDC) signed for oil and gas exploration with Petrobras, a Brazilian state owned company while a week earlier, another agreement was signed with the United Arab Emirates (UAE)-based RAs Al Khaimah Gas Company (RAK Gas).

Both PSA are 11 year old contracts broken into 4:4:3 years of implementation in the Indian Ocean, South of Tanzania. Petrobras committed itself to spend US$46 million for drilling two wells in the South Coastal Region, $44,306 for land license and $100,000 annually for human resource development. Mr. Joao Figueira, Petrobras director said this is another opportunity for their company that paves a way for their long-term investment in the country. The company has another PSA agreement adjacent to the new area.

“The discovery of oil will pave the way for our long-term relationship with Tanzania,”  Figueira said.  

Mr. Yona Killaghane, TPDC managing director said TPDC will take 40% at the beginning and 60% once the investment costs are recovered. This share structure is uniform for all oil agreements.  The structure for the gas is 30% then 50% after recovering investment costs. Killagane said Petrobras’ oil exploration in the Block 5 area, signed in 2004, was progressing well as shown by the photos taken by the company. 

After the photo analysis they will conduct three-dimension seismic to zero down on a possible drill. Petrobras and RAK Gas will incur all the contract expenses related to exploration and appraisal operation. In the event of oil discovery, the companies will recover all the contract expenses incurred from the volume of crude oil saved and produced in the contract area not exceeding 70%.

Other companies that are searching for oil and gas exploration in the country are Maurel and Prom of France, Dominion Oil and Gas, Ndovu Resources, Petrodel Oil and Gas, PAnAfrica Energy of UK, Ophir Energy of Australia, and Artumas Group of Canada.

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