Last week the Government of the United Republic of Tanzania announced the 4th Tanzania Deep Offshore and North Lake Tanganyika Licensing Round. The official launch of the Licensing Round will be on 25 October 2013 at the 2nd Tanzania Oil and Gas Conference and Exhibition and will conclude on 15 May 2014. The Licensing round will be a competitive process. Bids will be submitted to the state run Tanzania Petroleum Development Corporation (‘TPDC’).
In total eight blocks are being offered; seven blocks are deepsea with water depths between 2000m and 3000m, and the North Lake Tanganyika block is described as being offshore of the East African Rift System. The average size of the blocks is 3000sq. km though the size of the North Lake Tanganyika block is stated to be close to 9,700sq. km.
This round was initially announced in April 2012, with an intended closing date of April/May 2013, however it was postponed due to technical reasons and a desire by Tanzania's Ministry of Energy & Minerals to present a new Natural Gas Policy in the October 2012 Parliamentary session. The Tanzanian government is keen to remain competitive with neighbouring countries including Kenya which has opened up to prospectors and has seen gas finds of approximately 2tcf.
When the Licensing Round was first announced in April 2012, 9 blocks were offered as part of the process. The delay has allowed the Tanzanian Government to reassess the available acreage and, as a result, they have subsequently removed two blocks from the auction process. The Government has stated that these two blocks (Block 4/1B and Block 4/1C) are being reserved for TPDC to allow them to pursue a different exploration approach in strategic partnership with an entity sourced through a competitive process. With the reservation of these blocks in mind, the Tanzanian Government has added relinquished areas of existing deepwater blocks to the blocks still within the Licensing Round, as well as providing additional seismic data both from new sources and operators of the relinquished areas.
The regime under which a successful applicant will operate is still uncertain to a degree. The current regulatory structure is based around the Petroleum (Exploration and Production) Act 1980 which requires successful applicants to enter into a Production Sharing Agreement based upon the current Model Agreement released in 2008. Whilst it is very likely that this will continue to form the basis of any exploration activities, TPDC has announced that it will be seeking to introduce a new, more competitive, fiscal regime for activities taking place in waters with depths ranging from 2,000m to 3,500m. This will obviously have significant ramifications for those who successfully obtain the seven deepsea licences.
For further information on the regime under which oil and gas activities are conducted in Tanzania, please click here.