Paragon Offshore appoints ISS to drill in Tanzania Songo Songo Island

Paragon M826 can drill to depths of 20,000 ft

US company Paragon Offshore has appointed Inchcape Shipping Services (ISS) to provide marine and logistic services for a new drilling campaign off the Songo Songo Islands, Tanzania.

The Songo Songo project is the first new commercial drilling operation in Tanzania in a number of years. Paragon Offshore has been contracted by Tanzania’s first natural gas producer, PanAfrican Energy on a nine-month campaign.

“We are delighted by our first appointment by Paragon Offshore in East Africa,” said TS Mahesh, General Manager, ISS Tanzania.

“The opportunity to support this drilling campaign takes ISS to the next level in the oil and gas support service sector in Tanzania and boosts our future growth plans.”

The services ISS is providing for Paragon Offshore include full husbandry, crew logistics, visa assistance as well as arranging marine and air charters.

Paragon Offshore, a leading provider of standard specification offshore drilling services, is deploying jack-up rig M826, which was delivered to the field on board semi-submersible vessel, OHT Falcon, to be floated off and pinned to the drilling location.

M826 is expected to clear actively producing wells to enhance output and drill several new wells in the same field
.

Read more…

WENTWORTH RESOURCES REPORTS $4.5 MILLION LOSS AS MNAZI BAY DEVELOPMENT CONTINUES

Wentworth Resources has reported a $4.5 million loss for the six months ended in June 30^th 2015 as second quarter exploration dropped and development capital expenditures increased significantly to $2.31 million and $7.04 million, respectively, compared to $3.69 million and $0.30 million, respectively, in 2014.

The loss is also due to an increase in financing costs as the company raised funds for development in Tanzania including $4.36 million of a credit facility to fund operator cash calls for Mnazi Bay development expenditures

According to financial statements released in Wednesday the working capital is also down to $5.77 million compared to $15.84 million at December 31, 2014

On July 1, 2015 the company successfully completed a private placement and issued 15,412,269 new common shares for cash consideration of $0.50 per share for total gross proceeds of $7.64 million.

According to managing director Geoff Bury the new funds further secure the Company’s balance sheet in advance of generating cash flow once gas sales start in the coming weeks.

“The recent successful equity raise completed on July 1 demonstrates confidence in our long-term investment strategy in East Africa.  These new funds further secure the Company’s balance sheet in advance of generating cash flow from natural gas sales to the new government owned transnational pipeline in Tanzania. With discussion in regards to the payment guarantee agreement at an advanced stage, the Company looks forward to bringing gas on stream in the weeks ahead.  We wish to thank shareholders for their continued support during this exciting period in the Company’s history,” he said

Wentworth Resources has 39.925 percent participating interest in exploration and 31.94 percent in production while the operator Marel et Prom has 48.06 percent and 60.075 percent participating interest in exploration and production respectively. The Tanzania Petroleum Development Corporation will also acquire a 20% production interest during production.

Read more…

The oil giants are coming to Tanzania

International oil giants are bearing down on East Africa. Off the coast of Tanzania, the discovery of 46.5 trillion cubic feet of natural gas reserves has put the country on the world energy map. The number is expected to rise to 200 trillion cubic feet in the next two years, and eventually transform Tanzania into a middle-income country.

Companies like Exxon Mobil, BG Group and Norway´s Statoil are working with the Tanzanian Petroleum Development Corp (TPDC) in exploration, building infrastructure and construction. However, the real issue is the profit-sharing contracts currently being negotiated between the big oil companies and the government.

The Production-Sharing Agreements (PSA) between the international firms and the TPDC are confidential. However, the draft of a contract with Statoil has leaked. Instead of the expected 50-75%, Tanzania would only be getting 30-50% of the “profit gas.” The government has little to no leverage but everyone knows the country needs the investment big oil could bring.

With elections coming up this year, the oil and gas question is a hot topic. For a politician trying to gain traction it is heaven-sent. From independence until his retirement in 1985 the country was lead by the great Julius Nyerere, whose ideology was socialist and has been called communist. The communitarian mindset lead to many great things and is still tangible in political discourses. However, it also lends itself to misuse.

The pre-election debate on the natural gas question for instance is full of flaming protectionist rhetoric. Here-comes-the-imperialist-west-again-we-must-protect-our-interests-so-vote-for-me-ism seems popular, especially with ruling party CCM. It simplifies things nicely, takes the attention away from failing schools and hospitals and reminds everybody that the problem is, really, external.

In this spirit parliament has just approved the Non-Citizens Employment Regulation Bill making it much harder for foreigners to work in the country. Partnership with various multinational oil giants will certainly see an increase in the number of foreign workers, never-mind the Chinese. Actually, do mind the Chinese, but somebody else can write about that. Ensuring that the ordinary worker gets a piece of the sloppy oil cake is very important, although it remains debatable whether this bill is the most effective way to go about it. One could argue that it discourages investment and that it forces companies to weasel their way around state legislation. Another problem is the lack of skilled workers, especially for managerial positions. Statoil has some great academic exchange and partnership programs, for instance with the University of Dar es Salaam, but is it enough?

Then there is the issue of corruption and lack of transparency. New money is flooding in, especially to the largest city, Dar es Salaam. Although some money ends up in the right hands and is used for the right things there is a definite partiality in Dar to making money vanish. Valiant efforts have and are being made to fight corruption, but corruption penetrates nearly ever aspect of society at all levels. The ecosystem of corruption is deep and old, very old, so old it should have its own museum, celebrating a long, creative and colorful history of soda-buying, palm-greasing and generally being up to something.

Will we see the oil and gas turn Dar into another Lagos? A widening gap between rich and poor could lead to a more divided society, higher crime rates and more violent crimes, even violent conflict. There has already been violence in the Southern Mtwara district over the building of a pipe-line to Dar es Salaam.

I think it is safe to say that for East Africa as a region, the development of the oil sector cannot be seen as only a blessing or only a curse. But over the coming years there will be some pretty rude changes to the region’s geo-politics in which the discoveries of oil and natural gas are a major factor.

The important thing for us mortals is not to loose interest and to continue to apply pressure on the various actors involved. For instance, if oil giants like Statoil are serious about supporting sustainable long-term development they must invest heavily and whole-heartedly in training and succession programs, and they must assist with strong legal support for the governments they are negotiating with, fair fight, fair play. Similarly, politicians who are serious about protecting national interest must think beyond party-interest and short-term political gain in the things that they say and the papers they sign. The situation warrants an appeal to the highest sense of public duty.

As observers, both in the global South and North, it is our job to engage ourselves in the processes, blow whistles and put pressure on decision-makers. What happens in the next few years will determine the fate of the region for at least the next fifty if not beyond.

Read more…

Several Australian Companies To Invest In Tanzania Gas Industry

SEVERAL Australian companies have shown interest to invest in the country's natural gas industry, says the Tanzania Investment Centre (TIC).

The Mtwara Gas Pipeline is expected to be inaugurated later this month and the facility will enable the country to produce 2800MW of power by 2016.

East Africa is now a new oil and gas frontier after a string of hydrocarbon discoveries, which producers hope to exploit to supply energy-hungry Asian markets. Tanzania estimates it has more than 55 trillion cubic feet (tcf) of natural gas.

TIC said "Australian companies are confident that they are well positioned to add value in Tanzania gas industry, given its significant experience, knowledge and capability."

The statement pointed out that an LNG industry has the capacity to transform the economy and in Australia it was able to create over 103,000 jobs during the last decade.

"Once operational these projects will create an estimated 1,159 jobs. TIC registers gas projects subject to approval of the Ministry of Minerals and Energy," the statement said.

The statement said the move by Australian investors to show interest follows invitation by President Jakaya Kikwete during his recent visit to Australia.

The statement quoted TIC Public Relations Manager, Mr Daudi Riganda, as saying TPDC and Australia based-company, Squire Patton Boggs hosted dinner for Mr Kikwete.

"President Kikwete used the platform to engage leaders in Australian energy and resources sector on the investment landscape in Tanzania," the statement observed.

TPDC has been designated as the national oil company with aspirations to continue to be involved in exploration and development activity within Tanzania and expand its reach internationally.

Mr Clare Pope, Partner in Energy and Natural Resources at Squire Patton Boggs, said Tanzania had taken many important steps to ensure the development of its oil and gas industry and participation by significant international oil and gas companies.

Mr Campbell Davidson, Managing Partner of Squire Patton Boggs in Sydney, said: "As we see continued growth in foreign direct investment in East Africa, we are working with a number of key energy clients in Asia-Pacific to ensure they can benefit from the strides being made in the energy sector."

Between March 2007 and March 2017 TIC registered 35 projects from Australia, worth US $1,163 million. Once operational these projects will create an estimated 1,159 jobs

Read more…