UK: New Gas Find Raises Expectations As Regulations Remain Unclear

Last Updated: 15 April 2013
Article by Peter Kasanda, Paul Jones and Lucy Minde

The announcement of the discovery of a further 4-6 tcf of natural gas in offshore Block 2 has raised expectations that Tanzania's gas reserves will be enough to sustain the development of an LNG plant. Alongside the commercial viability of the gas reserves however, IOCs with an interest in Tanzania are looking for clarity on the legal and regulatory framework that will govern the management of those reserves and the freedom that investors will have to export gas produced.

Status of the Policy

In our February briefing, we reported that the second draft of the Natural Gas Policy (Policy) was understood to have been completed and TPDC have stated that the Policy could be adopted by June.

Though not legally binding, the Policy will establish principles on which the subsequent Natural Gas Utilisation Master Plan and Natural Gas Act will be based. Publication of the final Policy will give investors some idea of the Government's position on some of the major issues affecting the industry (such as ownership of natural gas infrastructure and domestic supply obligations) however the full picture will not be clear until the Natural Gas Act - which will turn the Policy's principles into binding law – is passed.

The passing of the Act is a process that will itself take time. As we have reported previously, any Bill requires three hearings in Parliament (and must be published in the Government Gazette before the first hearing to allow public comment) before it can be adopted and Tanzania's Parliamentary timetable is likely to limit the pace at which this can move.

There are only four ordinary Parliamentary sittings in a year, one of which has already taken place, the second of which will be budget session due to start on April 9 and the final two sessions will take place later in the year. Given that there is likely to be extensive debate over the provisions of the Bill that will become the Natural Gas Act, it may take several sessions for the Bill to move through the required stages.

IOCs will not commit to making final investment decisions until they are comfortable with the legal and regulatory framework in Tanzania and new gas finds will lead to increased calls for clarity in this area.

New gas finds

Statoil and its Block 2 partner, ExxonMobil, on 18 March announced the discovery of 4-6 trillion cubic feet (tcf) of natural gas reserves in the Tangawizi-1 well. This is the fourth successive discovery in Block 2 within a year and adds more weight to the proposal to develop an LNG plant in Tanzania.

Mr. Tim Dodson, Statoil's executive vice president for Exploration, has stated that recoverable gas in the region of 10-13 tcf would add robustness to any plans to develop an LNG project in Tanzania. Statoil now has 15-17 tcf volumes in-place.

Mozambique's new petroleum law

Mozambique's petroleum regulator announced this month that it had completed its review of the nation's oil law (the Petroleum Code of 2001) and submitted it to a ministerial council for discussion who will in turn submit an amended document to Parliament for review. Mozambican Energy Minister Salvador Namburete is reported to have said, "We're going to try to give it priority," while making clear that the Ministry did not have control over its passage through Parliament or the council.

A Natural Gas Master Plan has also been presented, drafted by IFC International, a US-based consultancy, with funding from Norway and the World Bank. Other recent legislative changes in Mozambique include amendments effective January 2013 to the fiscal regulations governing the extractive industry with the introduction of a tax applying to non-resident companies on the sale of Mozambican assets.

Mozambique and Tanzania are joined by other East African countries including Uganda and Kenya in the process of overhauling their outdated legal and regulatory frameworks. We have separately considered the form and pace of regulatory change across the region in a Legal Weekarticle published earlier this month.

Other news

New Chinese Premier visits Tanzania

President Xi Jinping arrived in Dar es Salaam on 24 March for a two-day visit and is expected to discuss Chinese investment in the energy and minerals sector. It is reported that President Xi Jinping will sign 19 contracts whilst in the country relating to projects being implemented jointly with Tanzania though it is not known what percentage of these relate to projects in the energy sector.

Notable Chinese investments in the energy and minerals sector include Sichuan Hongda Group's USD 3 billion investment in the Mchuchuma coal and Liganga iron ore projects in southern Tanzania and the Export- Import Bank of China's financing of the USD 1.22 billion, 523-kilometer gas pipeline from Mtwara to Dar es Salaam, which will be constructed by the China Petroleum Technology and Development Corporation.

BG completes Jodari appraisal

BG announced the completion of its appraisal programme on its Jodari field in Block 1 offshore Tanzania. BG reported the results as being excellent and better than expected. As indicated earlier, the flow of good news from BG and other operators in Tanzania continues to strengthen the case for developing LNG facilities.

Jacka Resources signs PSA

Jacka Resources, an Australian stock exchange listed company, signed a Production Sharing Agreement (PSA) with TPDC at a ceremony that took place on 19 March. The PSA gives Jacka Resources a 100% interest in the onshore Ruhuhu Block in southwest Tanzania and the company is set to start exploration work immediately.

Power crisis set to continue

The debts of Tanzania's state-owned electricity company Tanesco continue to increase and the off-taker faces the possibility that the country's independent power producers will limit or stop supplying to it until outstanding amounts have been paid.

It has been reported that Tanesco has made an application to the World Bank to be provided with a USD 100 million facility to help fund emergency electricity generation but there is no indication yet as to whether these funds will be extended. Such emergency support would also fail to address some of the more fundamental financial problems facing Tanesco.

The Government has on previous occasions come to the assistance of Tanesco and many will expect it to do the same in the near future to prevent the crisis from deepening further.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Peter Kasanda
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions