SWALA ENERGY GETS MINISTERIAL CONSENT FOR TANZANIA FARM-OUTS

Swala Oil and Gas (Tanzania) plc ('Swala' or 'the Company') is pleased to advise that it has received a 

no objection notice from the Ministry of Energy and Mines (“MEM”) to the farm-out of 50% of its 

interests in the Kilosa-Kilombero and Pangani licences to Tata Petrodyne Limited (“TPL”). 

With the receipt of consents from the Tanzanian Petroleum Development Corporation, the 

Tanzanian Revenue Authority and now from the Ministry of Energy and Mines, the Company is 

awaiting only the consent of the Fair Competition Commission (“FCC”). The Company shall update 

the market once this final consent is received. 

Dr. David Mestres Ridge, Swala CEO, said: "The rapid approval by our regulators to the farm-out of 

our two licences illustrates their desire to encourage activity in this important economic sector. We 

are confident that the FCC consent shall be received soon, which shall allow TPL to join the licence 

joint venture ahead of the planned drilling campaign.” 

For further information please contact: 

Swala Energy Limited 

David Mestres Ridge (CEO) 

david.mestres@swala-energy.com 

www.swala-energy.co.tz 

Frontline Porter Novelli 

Irene Kiwia 

T. +255 787 611 213 

irene@frontline.co.tz 

About Swala: 

Swala is an affiliated company to Swala Energy Limited, a company in turn listed on the Austral

SOURCE:Swalaenergy.com

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Petroleum Industry's Local Impact

Tanzaniapetroleum's  core objectives include the acquisition of latest information on  Tanzania's exploration and production activities,gain exposure to     the latest trends and development in the East African market and  to keep abreast of geopolitical,industrial and technological developments.
Articles 10 and 109 of  2010  mining Act Stipulate that exploration firms must make provisions for local ownership in areas where they are active.
Therefore  as active players in the industry we are committed to act as a check and balance against other players as we move closer to commercial production.
Some of the prevalent concerns include,transparency in revenue management,sharing of royalties with local communities,access  to information,environmental degradation  and lack of consultation with communities  in oil-rich regions.
Lastly  is to highlight  the  secrecy in public sharing contracts that the government has with oil,gas and mining companies.
    The writer is an oil and gas analyst.Member of Tanzania Petroleum

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President Kikwete signs oil, gas bills into law

Dar es Salaam. President Jakaya Kikwete has assented to five bills, including three energy-related legislations that were fiercely opposed in Parliament.

The Petroleum Bill, Tanzania Extractive Industry (Transparency and Accountability) Bill and the Oil and Gas Revenue Management Bill, all of 2015, were rejected by the Opposition after the government submitted them for debate under a certificate of urgency.

Opposition lawmakers later walked out of Parliament and left Dodoma when their attempts to scuttle the bills failed.

In a brief ceremony at State House yesterday, President Kikwete signed the bills in a move Chief Secretary Ombeni Sefue said would ensure stability in the extractive industry.

The other two bills assented to were the Teachers Service Commission and the Commodity Exchange, which seek to establish a teachers’ body and the commodity exchange market respectively. President Kikwete did not speak at the function.

“These are very important legislations to farmers, teachers as well as the fast growing extractive industry especially the oil and gas sector. These laws seek to address challenges faced by teachers, farmers and seek to position Tanzania on a strong institutional, legal and regulatory platform for oil and gas economy for the benefit of present and future generations,” said Mr Sefue. The Petroleum Act seeks to establish the Petroleum Upstream Regulatory Authority (Pura) and designating Tanzania Petroleum Development Corporation (TPDC) as the National Oil Company which will participate fully from the petroleum exploration to production.

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Australia resource giants invited to Tanzania

Mr Kikwete on Tuesday met with Prime Minister Tony Abbott in Canberra as part of a four-day visit, just months before he ends his second and final term as leader of the east African nation.

"We invite companies to develop the LNG, make use of the natural gas to produce other products," the president said at the opening of the talks.

"I'm here to discuss how to further our relationship on a political level."

About 18 Australian mining firms have more than 100 operations in Tanzania, which has the second largest gas reserves in east Africa, after Mozambique.

Mr Abbott said he hoped to build on the existing business ties.

"While we are separated by a great ocean, we are reaching out our hands across the ocean," he said.

The two leaders are also understood to have discussed security issues, including the threat from al-Shabab, which is part of the Islamic State network.

Tanzania is keen to harness the use of Australian vocational trainers and universities.

On Wednesday, Mr Kikwete will receive an honorary Doctor of Laws from the University of Newcastle, which has offered scholarships to Tanzanian students for many years.

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Will Tanzania Benefit From Natural gas discoveried

ELuck has struck the region of Tanzania.

For couple of years now new announcements of natural gas discoveries are  being made.

Mtwara, Tanga, Pwani Ruvuma have found natural gas deposits.Exploration is still ongoing
So even more discovery could be forthcoming.

Luck has definitely struck Tanzania.But the question is how will the people of this country will benefit from this?

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See Where does Petroleum Come from

We are going to talk Origin of petroleum

But First  I will talk about the origin of the world itself, Rock outcrop at the surface of the earth have been producing oil for century and this oil was known as rock oil, Because at that period oil was seeping out the rock, But at the middle of 19 century some body called the word Petroleum, Petro is greak word meaning rock and leum is latin word meaning oil and they combine these two word called petroleum. Then become popular word and eventually the word adopted by industry itself and now is known as petroleum industry

 Where does petroleum come from?

 There are two theory about where petroleum come from

·         Organic theory :State that oil was developed over millions of years from organic materials from remains of animals and plants that were once alive, the proteins life floaded in the sea like plankton and algae then die and fed to the bottom of the ocean.

·         Inorganic theory In this teory the source of oil is from chemical reactions between minerals, In the laboratory scientists have been able to make methane gas by applying heat under high pressure to minerals even though a very small percentage of oil today may have developed from in organic chemical reactions between minerals the source of most our oil appear to be the result of organic decomposition.

These decomposition is the decay of the remains of animals and plants that died millions of years ago

                When am talking about animals that was died and generate oil am talking about tiny microscopic animals that live in the sea eg plankton and algae

    These animals die under special circumstances, and what do I mean by that?

         As you know when most animals die other animals and bacteria arrive to consumes the remains living nothing. In the shallow water where these animal live, sweep current come on and push these down to where there is no enough oxygen to live and so they die. These animals went from an aerobic environment where there is plenty of oxygen to an anaerobic environment where there is little oxygen where all die at the same time.

In an anaerobic there also not enough oxgen for most animals microbs or bacteria to come along and eat the remains of planktons and algae so the just lie there until the get buried by particles of silt and sand.

Over period of millions of years these layers of remains in sand and silt particles are buried and curved by more layer until first layer become very deep. All the way of these layer to press down and squeezed caused increased in pressure and temperature until the sedimentary layers are formed into shale, sediment change into rock, and little dead microbs get cooked into hydrocarbon.

These is the theory of how petroleum and coal is made.

Oil is made from animal like plankton

Coal is made from vegetation like plants

Gas is made from deeper formation where microbes are cooked longer

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CAG TO AUDIT OIL AND GAS COMPANIES

Dar es Salaam: The Controller and Auditor (CAG) will carry a special audit on oil and gas industry.

CAG Mussa Assad said citizens from areas with gas and oil should benefit from companies operating in their locales.

“This sector [oil and gas] is very crucial,” he said, adding “we will make sure they are controlled accordingly to give to the society what it really deserves.”
Assad said his office might fail to compete auditing in some offices following budget deficit.

Despite receive less from treasury; the CAG remains adamant that his office will execute its duties.

“With the little we have we will make sure we implement fruitful projects which will benefit citizen but we will not be able to finish all of projects.”

For this fiscal year the CAG office were scheduled to receive TZS 86 billion but only received TZS 76 an amount which will not be enough for all projects set for this year.

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Components of Production Sharing Contract in Kenya

Licensing of petroleum exploration blocks, is governed by the Petroleum (Exploration and Production) Act Chapter 308 of the Laws of Kenya. All contracts are based on a Model Production Sharing Contract (PSC) issued as a schedule to the Regulations issued under Section 6 of the Act.

The signed Production Sharing Contracts have the following key component:

a) Signature Bonus: This is a one-off fee payable to the Government by the Company upon signing of an oil exploration contract. It depends on the area of the Block and previous data acquired on the Block. Signature Bonus negotiation came into effect in 2009. In block 12B for example the signature bonus paid was $300,000 according to JV partner Australian Swala Energy. In block L27 operated by CAMAC Energy the signature bonus paid was $310,000 according to the PSC available on this website.

A surface fee is also payable and is calculated on the basis of the surface area of the Contract Area on the date those payments are due. In Block L27 the amount set is $5 per square kilometre per annum during the Initial Exploration Period, $10 per square kilometre per annum during the first Exploration Period, $15 per square kilometre per annum during the second Exploration Period and $100.00 per square kilometre per annum during the Development and Production Periods

b) Work programme and expenditure: The contractor guarantees the agreed work programme and minimum expenditure. Initially this was pegged at 15% bank guarantee and 85% parent company guarantee. However, the Ministry has improved this and now the newly licensed companies are required to provide a 50% bank guarantee and 50% parent company guarantee.

This is to make sure that the companies proceed with their work progamme expeditiously as agreed with the Government and that incase of non-performance, the Government can liquidate the guarantees more easily. For small companies (based on their annual turnover criteria), they are required to post 100% bank guarantee. It is important to note that upstream petroleum operations are capital intensive and the Government entirely relies on the oil companies to invest their risk capital in the operations.

In addition, this risk capital is raised through equity. This is contrary to investment in mid stream and downstream petroleum segments which can be funded by debt

c) Cost oil: This is usually the negotiated percentage of total crude produced for recouping of investment costs incurred by the contractor in exploration and production of oil in a given field. It is normally up to 60% of all the oil produced in a field for about five years.

d) Profit oil: This is the remaining oil after deducting cost oil and is shared between the Government and the contractor. For example, when a field is small the Government take is 50%. As the production increases, the Government take can increase up to 78% of the total profit oil.

e) Windfall profit: Where oil prices are higher than the negotiated threshold, the Government creams off contractors take above the threshold crude oil prices by 26%.

f) Exploration phases – there are three exploration phases of two years each, the initial period, first additional period and second additional period. For ultra deep offshore blocks, the initial period is extended to three years due to extra logistical challenges in the deep water acreage.

g) Relinquishment – is 25% of the area of the block for each period

The PSC also has the license rental fee and training fee included. In Block 12B for example the license rental fee is set at $40,000 during the first year (2012-2013) and $80,000 during the second year, training fee is $100,000 per annum. During the first production phase the training fee is set at a minimum of $200,000 in Block 1 PSC with Lion Petroleum.

Check out PSC’s for the various East African countries namely Kenya, Uganda, Tanzania, Mozambique available on our website.

Additional Source: Ministry of Energy & Petroleum Website

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Oil prices 'could fall further'

Oil prices may have further to fall despite stabilising in recent months - and even beginning to rise modestly - because of a massive oversupply the International Energy Agency (IEA) has said.

The IEA said lower oil prices were likely to last well into 2016.

The agency added the world oil market was unable to absorb the huge volumes of oil now being produced.

It follows the massive drop in prices which started last summer.

The price of Brent crude fell sharply last year from $115 a barrel in June to $45 a barrel in January.

The current price of Brent crude is $59 a barrel.

The fall in prices has led oil firms to cut back investment in exploration, while North Sea oil has come under significant pressure.

All seven major global oil firms have also reported a year-on-year declines as a result of lower oil prices.

'Oversupply'

Only last month the Office for Budget Responsibility (OBR) forecast North Sea oil and gas revenues would fall to below 0.1% of GDP over the coming decades.

It said the tax take from North Sea oil and gas had already fallen by 80% in the last three years.

"The oil market was massively oversupplied in the second quarter of 2015, and remains so today," the IEA said in its monthly report.

"It is equally clear that the market's ability to absorb that oversupply is unlikely to last. Onshore storage space is limited," it said, adding: "Something has to give."

"The bottom of the market may still be ahead."

Core members of the Organisation of Petroleum Exporting Countries (Opec) have continued to produce the same level of oil in the past year despite falling oil prices in an attempt to regain market share.

US oil production has also soared in recent years, as fracking - or the process of extracting oil from shale rock by injecting fluids into the ground - has revolutionised oil production in the country.

Opec's response to the fall in prices was to refuse to cut production. Many Opec nations are able to tolerate a lower oil price despite losing money.

Record

For other nations such as Russia the lower oil price is doing substantial harm to economic growth

Last month, official figures showed the impact of international sanctions over Russia's continued involvement in east Ukraine and the lower oil prices had led to a 4.9% contraction in the Russian economy in the 12 months to May.

The IEA said Opec crude oil production rose 340,000 barrels per day (BPD) in June to 31.7 million barrel as day, a three-year high, led by record output from Iraq, Saudi Arabia and the United Arab Emirates.

It said Saudi Arabian crude oil supply rose 50,000 barrels per day to a record high of 10.35 million BPD in June, while Iraq crude oil output surged 270,000 BPD in June to its highest-ever rate of 4.12 million BPD.

However, increases in production have come just as demand for oil in economies across the world from Europe to China - the world's second-largest consumer of oil - has slowed.

The IEA trimmed its forecast for global oil demand growth this year slightly to 1.39 million BPD and said it expected global demand growth to slow to 1.2 million BPD in 2016.

The agency added non-Opec supply growth was expected to grind to a halt in 2016 as lower oil prices and spending cuts take their toll. It forecast zero growth in non-Opec oil supply in 2016 after an increase of 1 million bpd in 2015.

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New petroleum producers survey policy options in wake of oil price slump

Countries seeking to develop newly-discovered petroleum resources are facing a fall in global oil prices, with competition from the ‘shale gas revolution’ in the United States, as well as renewable energy sources.

At a New Petroleum Producers Discussion Group in Tanzania, organised by Chatham House and co-sponsored by the Commonwealth Secretariat, authorities from more than 20 countries met this week to find solutions to these and other shared challenges.

The four-day forum from 30 June to 2 July, at which a set of Guidelines on Good Governance for Emerging Oil and Gas Producers was released, was attended by government ministries and national oil companies from Belize, Guyana, Kenya, Mauritius, Mozambique, Jamaica, Seychelles, Trinidad and Tobago, Tanzania, and Uganda, among other nations.

“In the midst of the oil crisis there is less capital available for investment,” commented Michael Mwanda, Chairman of the Tanzania Petroleum Development Corporation, which hosted the meeting in Dar es Salaam. “Some projects which were pegged on a high oil price are now becoming uneconomic and difficult to operate.

“We need to learn from each other and share experiences on how to reduce costs, operate efficiently and become more competitive,” Mr Mwanda said.

Addressing the forum, Ekpen Omonbude, Natural Resources Adviser at the Commonwealth Secretariat, remarked: “This price decline has necessitated a critical look at strategies to manage petroleum resources, from development programmes to responsible wealth management, to ensure benefits for future generations.”

Dr Omonbude stressed that while the slump in the price of oil – from over US$100 a barrel in 2014 to around US$60 today – presents immediate challenges, these can be mitigated through the adoption of flexible fiscal regimes, increased economic diversification, the development of good governance regimes and revenue transparency.

“Our mission is clear – to help position our member countries to realise the potential of their resource wealth as a driver of sustainable development and economic prosperity,” the Commonwealth representative said.

The New Petroleum Producers Discussion Group was established in 2012 to help countries think critically about policy options available either during the first steps of exploration and development or when restructuring governance arrangements. Options include setting up regulatory institutions and drafting regulations and laws that encourage investment, while balancing the needs of society and environmental protections.

This week marked the first time the discussion group has met outside London and included a final-day national seminar for representatives of Tanzania’s oil and gas sector. Co-sponsors of the initiative include the Natural Resource Governance Institute and the Africa Governance Initiative.

The Guidelines for Good Governance in Emerging Oil and Gas Producers, a synthesis of proposals put forward at each discussion group, seek to guide national authorities to pursue policies which follow good practices, but which also respond to national contexts.

Dr Valérie Marcel, Associate Fellow at Chatham House, principal author of the guidelines, said: “The emergence of shale oil and new renewable technologies offer opportunities and challenges. How the emerging producer is affected and will respond is what we have been debating. One of the main issues is how to adjust to a low price environment, asking what impact is this going to have on licensing terms and the ambitions of national oil companies.”

She added: “Emerging producers are thirsty to learn from their peers about what has worked elsewhere and what advice to give. More established producers want to know whether they are doing things right and what pitfalls they should avoid. This is a really important learning process.”

During the forum, participants exchanged experiences on how to attract investment while preserving long-term national interests, managing expenditure plans as well as ways to guard against abuses and fraud in contracts and licensing. Training sessions focused on involving local suppliers in supply chains, the design of fiscal systems and new information tools.

Eddy Belle, Chief Executive of PetroSeychelles, the national oil company of Seychelles, said: “[Petroleum] is a very dynamic business – there is new technology coming in and new ways of doing things. What Chatham House is doing with the help of the Commonwealth Secretariat is getting people together so you have the chance to learn from the mistakes as well as the successes of others.”

Bashir Hangi, Communications Officer for Uganda’s Petroleum Exploration and Production Department, commented: “Such a forum helps us a lot as emerging producers. We peer review ourselves, and our people go home with a lot of advice. One piece of advice I would share is that you cannot ignore your stakeholders – civil society, academia and communities where there are operations. They should not be taken for granted; they should be brought on board and be involved in the management of the resource.”

Anthony Paul, Managing Director of the Association of Caribbean Energy Specialists, said: “Oil and gas resources give opportunities to deepen industrialisaton, providing power and access to better lighting, heating and cooking facilities as well as petrochemicals and fertilisers. There are also benefits from developing the services industry. What strikes me most is that all countries want the same thing: they want the resource to benefit their citizens.”

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See How Oil and Gas Industry Works

Today, we can learn that even though you may be buying Chevron Gas, Chevron may not have much to do with it. Welcome to our overview of the oil and gas vertical. You know most people think they know the oil and gas industry, but they really don’t. So we’re going to see if we can give you some useful information and clear up some common misconceptions. So most people think of companies like ExxonMobil and just assumed they get oil in the ground somewhere in the world, ship that crude in ExxonMobil pipelines to an ExxonMobil refinery, sell it in ExxonMobil gas station. But guess what? That is absolutely wrong, that is not how this industry works. This is how it works. 

The industry is composed of four main segments; upstream, midstream, downstream, and service. Upstream is actually getting the crude out of the ground. You often hear it called E&P or Exploration and Production. This is upstream, this is upstream, this is upstream, this is actually and FPSO. The next segment is midstream. Midstream is basically moving that crude oil in natural gas. So midstream stuff such as pipelines, supertankers, rail cars. Then, we move to downstream. Downstream is actually the refinery, the refining manufacturing and selling of the products from crude oil and natural gas. So downstream things such a refineries, retail loop stations, fertilizer which is big product of petrochemical refining, lubricants, motor oils, retail gas stations, and plastic which is another large product of crude oil. Then, we move to the service companies. Service are companies that actually provide manpower and help in services the oil and gas industry, but they don’t produce any petroleum or petroleum products themselves. So you have everything from the guys that out there designing the rigs to the crew boats that move men and equipment back and forth to the actual roughnecks that do the drilling, to the manufacturer of drill stem, and things like subsea installations. Every bit of this is service. 

Then, you also hear the word Super Majors or Combined. What is that? That are companies that do everything; upstream, midstream, downstream, and some service. And right now in 2013, there’s only five of them. This is it. These are the five Super Majors. So what does that mean? We’re going to talk you through literally from cradle to grave a drop the crude oil to the point where it gets into the gas tank of your car. So, the US government auctions off a block of land the highest bidder. After checking my last auction facts in the Gulf of Mexico, $2 billion somebody paid for rights to drill on a piece of land for ten years. That’s it. Think about that for a second. You write a check for $2 billion to have ten years to make that money back and hopefully some profit, but there’s no guarantees. So this case it was BP who spent that $2 billion for a deep Gulf of Mexico lease.

 BP then needs to drill, right? BP does not have its own drill rigs. BP contracts a drill rig basically rents it from companies such as Transocean. That drill rigs needs to be staffed by people, so you have companies such as Halliburton and Baker Hughes to actually help them operate that drill rig. The crude that gets produced on the drill rig needs to be transported. Guess what? BP puts out to open bid to all the different industries all the different companies in the world who will move this crude oil at the bets price. In this case, it was a supertanker and the win was won by Chevron. So Chevron has the crude oil in supertanker and it’s in transport to refinery, but halfway there, ConocoPhilips on their trading floor buys that crude and it turns around and sells it for few cents profit per barrel. And it was sold to Shell refinery who then refines that fuel at a profit, ships it in Kinder Morgan pipeline to a 76 gas station as owned by who? No, not 76. It’s owned by one of your neighbors which is called the Jobber. So there you go. There it is from literally getting out of the ground into being burning your gas tank as a fuel. And you look at how many different people are involved and how many different layers of profits are involved and this is a very complex industry. So hopefully this helps you understand at least at a high level what goes on in the oil and gas industry.

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