Tanzania signs $ 141 mm in oil and gas exploration agreements

The government through Tanzania Petroleum Development Cooperation (TPDC) has signed two grand Production Sharing Agreements (PSAs) worth $ 141 mm for exploration of oil and gas.
The agreements involve Ndovu Resources investor, a subsidiary company of Aminex of the United Kingdom and Heritage Oil investor, a subsidiary of Heritage Oil and gas of the United Kingdom, expected to undertake exploration of oil and gas in not less than 11 years.

Speaking at the signing ceremony, Minister for Energy and Minerals William Ngeleja pointed out that oil and gas exploration was capital intensive, risky and it took a long time. He said attracting risky capital was not an easy task particularly to countries like Tanzania where no such a discovery had been made before.
The minister explained that the two investors were committed to spending at least $ 75 mm and $ 66 mm for Ndovu Resources and Heritage respectively to cover the scheme.

He noted that Ndovu Resources and Heritage would spend $ 13,456 and $ 75,680 respectively as an annual licence fee with an added spending of a total of $ 200,000 each for training Tanzanians to develop resources.
According to the minister, the two investors will carry out oil exploration on their own expenses and the government will be not responsible for refunding the companies if they fail to meet their objectives. However, as they build oil walls the government will start generating income as they produce it.

He said there would be a calculation of total costs that the company had in building of a mechanism that would be reduced from the total profit obtained.
The Heritage investor under heritage Rukwa (T) will acquire and process 1,450 km new 2-D seismic data in North Rukwa Basin and 900 km South Rukwa basin where it is expected to drill at least during the initial exploration period. In the other agreement, Ndovu Resources (Nyuni) PSAs will cover about 20 blocks of 1,682 sq km in the area of East of Songo Songo island in Lindi region.

Recently, in their first PSA, Ndovu Resources drilled four wells in Nyuni areas making a gas discovery in Kiliwani off Songo Songo where their PSA expired in May, this year. The minister reaffirmed before the investors the government’s commitment to sustain favourable conditions for investors in oil and gas exploration and production.
He said: “You need to deploy the latest technology in this industry, ensure safeguarding the environment, adhere to good oilfield practices and work as good cooperate citizens.”

East Africa and Tanzania in particular has experienced intensification in exploration drilling activities.
At the moment, a drilling ship, the Poseidon is drilling a deep sea well in Block-5 off Mafia island. The Poseidon will drill two more wells, one for Statoil -- in Block 2 of Lindi -- and the other for Petrobras in Block-6.

Still BG/Ophir are mobilising another drilling ship -- the Metro -- to come to the country for a 2-4-well programme where it is predicted the first well will start in December.
“Although we have been working in the country dealing with exploration of gases we come across some challenges that we’re sure will not let us down, luckily this is the first big PSA agreement been signed by Heritage in Tanzania,” noted Heritage vice president Brian Smith.

For his part, the Ndovu Resources chairman said they looked forward to continuing supporting and empowering Tanzanians to extend government expectations.
“We look ahead in monitoring and following the recommendations from the government where one is to use available resources in the country,” he said.