VENTURES AFRICA – The Tanzania Petroleum Development Corporation (TPDC) has been asked to review and advise the Tanzanian government on 26 oil and gas exploration contracts; in a bid to crack down on agreements favouring individual producers over national interests.
Minister for Energy and Minerals Sospeter Muhongo – speaking at the inauguration of the newly appointed TPDC board in Dar-es-Salaam over the weekend – explained that the government has become increasingly concerned that a number of oil and gas production sharing agreements are not in the interests of Tanzania, but seem to concede unfair advantages to private parties to the agreements.
Many of these agreements were signed numerous years ago, and are thought not to place a high-enough importance on national rights in natural resources. The government of Tanzania is also beginning to suspect that firms may be overstating their production and operational costs in a ploy to increase their share of profits.
As such, the government is requesting that the incoming board of the TPDC reviews all such agreements currently in force, in a wave of steps intended to sharpen up the country’s energy policy. The TPDC had already decided to hold back on licensing decisions concerning nine new deep-sea oil and gas blocks until the government votes on a new gas policy – scheduled to take place in October.
The energy sector in Tanzania has been accorded this new level of importance in the government’s agenda as the country comes under increasing global attention due to large stocks of natural resources being uncovered in the country and the East African region in general. It is estimated that Tanzania holds natural gas reserves of at least 43 billion cubic feet, worth a massive $430 billion; with new sources regularly discovered through exploration projects. As such the country could potentially benefit vastly from a tightening of energy policy, and the sector could be set to boom over the coming years if the government manages to strike an appropriate balance between producers and national interests.
The TPDC board have been given until the end of November to review the contracts already in place, with a view to reporting back to the government with recommendations as to amendments or even total revocation of some of the agreements if the TPDC should feel it to be in the national interest. Entrusting the board with this task, Muhongo also highlighted the potential that the energy sector holds for Tanzania, saying: “The board should come up with recommendations on how best the country could benefit from the discovery of oil and gas exploration”.