Tanzania catches the eye of big oil explorers

Sunday November 6 2011

By JOHN MBALAMWEZI

The discovery of oil in Uganda and Mozambique has triggered renewed interest in Tanzania, putting the country on the radar of major oil explorers and sparking acquisitions and mergers in the scramble for oil blocks.

Last week, Tanzania signed the production sharing agreements (PSAs) with the two companies to explore oil and gas exploration in Lake Rukwa and Nyuni-East Songo Songo.

Minister for Energy and Minerals William Ngeleja said Aminex will undertake oil and gas exploration at Nyuni-East Songo Songo and about $75.3 million will be injected into the project. Heritage Oil will embark on oil and gas exploration at Lake Rukwa and will put in about $66.5 million.

“The terms of the PSAs cover 11 years, which are divided into three sub-periods,” said Mr Ngeleja. He said that though Tanzania has yet to find a commercially viable oil source, investors are confident that the country has oil.

He added that, “Exploration for oil and gas is capital intensive, risky and it takes a long time. In view of this, attracting capital is not an easy task particularly to areas such as Tanzania where no discoveries of oil have been made. I am therefore delighted to see enormous interest by junior and medium-ranked international companies in joining the exploration race”.

According to Mr. Ngeleja, the government is in production sharing agreements talks with more than six new international exploration companies to undertake oil and gas exploration in different prime-places of the country.

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He said that discussions are at different stages and if successfully concluded, these PSAs will cover Deep-sea Block-8, Lake Tanganyika area (northern area), Kyela, Ruhuhu, Mikumi and Pangani.

He said that, in promoting exploration of oil and natural gas, the government will ensure that the production sharing terms are competitive enough to secure the country’s interests and provide adequate incentives to investors.

The signing of the agreement with Aminex Plc and Heritage Oil Plc brings the number of exploration companies operating in Tanzania to 17 and 23 PSAs, the highest number since exploration of oil and gas started in the country in 1950.

“Oil remains the prize in off-shore East Africa and Tanzania in particular. Gas has been discovered but no commercial oil reserves have been found yet despite increasing evidence of its potential presence,” said Mike Rego, exploration director for Aminex Plc.

“The company has already made two discoveries of gas in the Nyuni area including the Kiliwani North field, which it expects to put into commercial production next year,” said Mr. Rego.

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