4th Tanzania Offshore Licensing Round 2012
Message from Mr. Yona S. M. Killagane
The TPDC Managing Director on the Bid Round
23rd April 2012 at Long Beach, California

It gives me a great pleasure to welcome you all to this very important occasion of the announcement of the 4th Tanzania Offshore Licensing Round. This event was first announced in August 2010 in Calgary, Canada, but has had to be postponed to this year for technical reasons. This is the fourth major licensing round that Tanzania is holding, and the first one after deep-sea drilling commenced in 2010.

The initial three rounds were held at various times between 2001 and 2004, the outcome of which led to the licensing of eight deep-sea blocks to several joint venture partnerships between Petrobras, Shell, Statoil, ExxonMobil, BG, Ophir, Dominion and Mubadala, among others.

The 4th Tanzania Offshore Licensing Round was planned to take place last year 2011. The round was postponed to allow areas to be relinquished in the interim period to be included in the round. The Government also wanted to take stock of the results of the deepwater drilling that was planned for the year 2010/2011. Industry also expressed the need for the TPDC to acquire more data in areas that did have adequate data for decision making purposes.

In recent years, ION-GXT through Span projects have acquired a significant amount of 2D seismic data offshore Tanzania. They have done so through East AfricaSPAN 1, 2, and 3. Additional infill 2D seismic data will be acquired this year through extension of East AfricaSPAN 3. Some of the relinquished areas do carry 3D seismic data acquired by the PSA operators and this data will be made available to the industry as part of the data package for the bid round. At this juncture, TPDC would like to pay tribute to TPDC data acquisition partners WesternGeco and ION-GXT who have undertaken several vintages of data acquisition; WesternGeco data that facilitated the licensing of the first three rounds, and ION-GXT for the new data and compilation of bid data packages for the fourth round. TPDC and ION-GXT will work overtime to make the necessary data set for the bidding round ready by September 2012 when the Launching of the Round will formally take place.

We are all aware of the encouraging results of the first round of Tanzania deepwater drilling in the years 2010/2011 by the BG/Ophir group. The second round involved the drilling of three other wells, one by BG/Ophir, one by Statoil/ExxonMobil and one by Petrobras/Shell, all the new wells being drilled in 2011/2012. Of the six wells drilled, five encountered commercial quantities of gas. Two more wells are expected to be drilled prior to the launching time of this round. Similar success has been registered in offshore Mozambique, making deepwater eastern Africa the newest exploration hotspot of the world.

The success has brought about challenges that the Government of the United Republic of Tanzania is addressing to make Tanzania the preferred exploration destination of the oil industry by taking initiatives and putting in place the required facilities to support the exploration sector. The Government in collaboration with operators has upgraded the Mtwara Port in the southeastern Tanzania to a standard of oil and gas supply/logistic base. The Mtwara Port can now handle all importations of seismic and drilling equipment and materials. Most operations are located in the southern coastal of Tanzania and depend on the Mtwara port. In the year 2012, the Government will operationalize Mtwara port as free port thereby enabling industry service providers to operate from Mtwara for much of the sub-region. The Government is also finalizing the Gas Policy and Natural Gas Utilization Master Plan to guide and coordinate the development of the gas industry in the country. This is expected to be ready by end 2012.

The Government is also supporting the construction of a 36 inch gas pipeline, 580km long from Mtwara in the south to Dar es Salaam. Once completed, this pipeline will enable transportation of natural gas from the southern and central coastal areas to Dar es Salaam where the main market is located. The pipeline is expected to be ready in two years’ time from now.

The Government through TPDC will undertake the 4th Tanzania Licensing Round offering eight (8) new deep-sea blocks to be competitively tendered by oil and gas companies. The blocks are located in the south-eastern part of the Tanzania offshore area. The blocks lie to the east of the currently licensed areas and have been designated as 1B, 2A, 3A, 3B, 4A, 4B, 5A, 5B.

The formal Launching event for the bidding will be done on 13th-14th September, 2012 during the 11th HGS-PESGB Conference on African E & P to be held in Houston, USA. The launching will be followed by road shows to be held in 16th-19th September, 2012 at the Singapore AAPG ICE, 24th-26th October, 2012 in London and 6th -8th March 2013 at Arusha EAPCE’13 in Tanzania. All conferences will have special theme on East Africa as the “Petroleum Province of the 21st Century” . Following the launch, there will be a 9 months period for the interested companies to visit the data rooms to be set up, buy data where necessary and submit exploration proposals to TPDC before the bid round closes mid May 2013.

Currently, we have in place the Petroleum (Exploration & Production) Act of 1980 and the Model Production Sharing Agreement (MPSA 2008), the details of which shall be discussed at our booth and International Pavilion Presentation. Tanzania will also be putting up a competitive fiscal regime conducive for operating in deeper waters of the range between 2000m to 3500m. This will soon be out and will be used for the new bidding blocks.

Some of you may well have visited our country for vacation or business however, for those of you not familiar with our history and surrounding; I hope you will spare me a few minutes to give you a brief insight of Tanzania.

Tanzania is located in East Africa and is bound by Uganda and Kenya to the north, the Indian Ocean to the east, Mozambique, Malawi and Zambia to the south and southwest, Democratic Republic of Congo, Burundi and Rwanda to the west. Due to its strategic geographic location, Tanzania is a gateway to most of these land-locked countries.

Tanzania is famous for its scenery and geology with Great Rift Valley, the National Parks and Game Reserves and the Roof of Africa, Kilimanjaro Mountain is within Tanzania and not as some of you might have been led to believe. The spice islands of Zanzibar and the surrounding splendid beaches and old Arab architecture are added tourist attractions.

The history of Tanzania is very varied and can be traced back to the earliest origins of man himself with rich evidence of the country’s prehistory form Olduvai George where our ancestors dwelled.

Tanzania has huge mineral potential with some of the best gold deposits in the world, precious stones, diamond, iron ore, copper, nickel etc. Major mining companies have already invested heavily in this sector due to our political stability, fair and competitive mining laws.

Ladies and Gentlemen: You will agree with me that the worldwide oil reserves from the existing fields are now decreasing and on the other hand, the demand is increasing from the emerging economies and growth of world population. The need for exploration and development efforts to establish new oil production for future is now stronger than ever before. Production to meet the future world demand is expected from offshore fields, and the world’s deepwater basins are where much of the hopes for this massive production capacity will come from.

Current oil prices are high enough to support capital extensive and high tech deep-sea exploration and production. The industry has now developed financial and technical capabilities to go to the deeper water such as 2000m where we have been drilling offshore Tanzania. Subsea technology has gone through greatest achievements in recent years reducing exploration and development costs of the deep-water.

Ladies and Gentlemen, the Government of the United Republic of Tanzania sees this 4th Tanzania Offshore Licensing Round as a milestone in exploring the untapped potential for hydrocarbons of the country. The details and bid conditions will be made public during September 2012 meeting.

The time to invest in Tanzania and East Africa is now. I look forward to seeing all of you in September 2012 for the launch of the new round.

Thank you for your attention.
Karibuni Tanzania!

Yona S. M. Killagane
TPDC Managing Director