Licensing Round And Gas Policy Progress

May has been a busy month in Tanzania's energy sector with the gas industry once again dominating headlines. The circulation of a revised gas policy, announcement of a fresh licensing round and delivery of government's energy budget for the coming year has kept commentators busy while troubles in Mtwara have once again raised security concerns.

Further draft gas policy released

The Ministry of Energy and Minerals this month released the third draft of Tanzania's Natural Gas Policy prior to the presentation of its budget for the coming year. The release of the latest draft policy was preceded by a workshop organised for members of parliament to brief them on the contents of the revised document.

Attached to this briefing is a summary of the contents of the draft which, while largely similar to the initial version, contains certain key changes including more extensive references to the role of a National Oil and Gas Company though it is unclear how this will interact with the incumbent TPDC.

International investors will need to seek further clarity on the likely structure of the National Oil and Gas Company, the aggregator and the government's proposals for investment in and ownership of natural gas infrastructure. Further details on pricing structures and domestic market supply obligations will also be anticipated and should become clearer once drafts of the Natural Gas Bill (which will become the Natural Gas Act) and Utilization Master Plan are available. MEM expects to publish the policy in June this year.

4th Tanzania offshore licensing round

The government through the Tanzania Petroleum Development Corporation announced the dates for a fourth deep offshore licensing round earlier this month. The licensing round will officially be launched in Dar es Salaam on 25 October and will remain open until 15 May 2014. A total of seven deep offshore blocks together with the North Lake Tanganyika block (which had previously been reported to have been awarded to Total) will be auctioned as part of the round. TPDC announced that it will reserve a further two blocks over which it will pursue an alternative exploration strategy in conjunction with competitively sourced partners.

This licensing round was cancelled last year pending the publication of a government policy on oil and gas exploration though the latest draft of the Natural Gas Policy makes very clear that upstream activities (including licensing issues) will be guided by a separate policy...