February passed with no further formal communication from MEM or TPDC on the status of the Natural Gas Policy though TPDC and the Minister of Energy and Minerals have made informal pronouncements suggesting that progress has been made. Elsewhere, there have been no further protests in Mtwara which is the location for a proposed new power plant and MEM have announced progress on the award of two new onshore PSAs.

Status of the policy

The Minister of Energy and Minerals, Prof. Sospeter Muhongo, was recently quoted as saying that the second draft of the Natural Gas Policy (Policy) has been completed and would be approved by Parliament before the end of the year. The Policy was first released in November of last year and was scheduled to be completed by the end of 2012.

Separately, the Tanzania Petroleum Development Corporation (TPDC) Director of Marketing and Investment, Joyce Kisamo, in her presentation at the East African Petroleum Conference & Exhibition that took place in Arusha from 6 to 8 February, stated that the Natural Gas Policy, Natural Gas Act and Utilisation Master Plan would all be published by June 2013. However, she did not discuss the status of the documents and what measures the government would take to achieve this ambitious timetable.

Given that the Policy was originally meant to be finalised last year and that it has not been finalised to date, it is unlikely that all three documents will be finalised by June 2013. This is especially so for the Natural Gas Act as it will not be able to pass through the full legislative process before June 2013. The Minister's reference to Parliamentary approval is likely to be a reference to the passage of the Act which is the only part of the new framework that will formally require Parliamentary approval.

Proposed new power plant for Mtwara

The Tanzania Electric Supply Company (Tanesco) has signed a memorandum of understanding with Symbion Power with a view to financing and constructing a 400MW gas powered electricity plant in Mtwara. The plant will serve the southern region of the country including Lindi and Ruvuma regions.

The power plant comes at a time when demand in the southern region is expected to increase with the proposed construction of cement and fertiliser factories in Mtwara and increased demand from Mtwara Airport. The plant would also provide electricity to Uranium One's planned mine in Ruvuma region.

The engineering study for the plant is scheduled to begin in March of this year and construction scheduled to commence next year. Completion of the project is expected within three years of financial close.

New onshore licensing

Total to be issued with exploration licence The Ministry of Energy and Minerals has announced that the government will soon issue a petroleum exploration licence to Total SA. It is understood that negotiations are now complete and all that is outstanding is government sign off. The licence will cover acreage on Lake Tanganyika on the border with the Democratic Republic of Congo. Having entered Tanzania in the late 1960s, Total has established significant operations in the petroleum downstream sector; however, this is the first time that the company will be conducting exploration activity in the country.

Jacka Resources concludes negotiations Jacka Resources, an exploration company listed on the Australian Stock Exchange, has recently concluded negotiations with TPDC for a Production Sharing Agreement (PSA) relating to acreage in the Ruhuhu Basin in the southwest of the country. Jacka has exploration interests in Australia, Somaliland, Tunisia and Nigeria.

BP interested in participating in Tanzania's upstream sector BP, who recently pulled out of the petroleum downstream sector in Tanzania, has indicated that it intends to re-enter the country, this time with upstream interest. A delegation from BP recently met with the Minister of Energy and Minerals to express their company's interest in acquiring exploration licences in the country. The recent gas and petroleum finds in East Africa continue to attract exploration companies to the region. However, it is likely to take time before BP can be issued with a licence. Licensing rounds have been put on hold until the Natural Gas Policy is finalised and given that it is unclear when this will be, we are unlikely to see movement in this area in the short term.

Other news

Swala Energy looks to the capital markets Swala Energy Limited, a Perth based company, is looking to raise funds on the Australian Stock Exchange to fund its activities in the region. Its subsidiary Swala Oil & Gas (Tanzania) Limited is also preparing to list on the Dar es Salaam Stock Exchange. This will be the first energy company to list on the Dar es Salaam bourse and will provide Tanzanians with the opportunity to participate in the sector.

Aminex PLC extends bidding period for Ruvuma farm-out Aminex PLC, a company listed on the London and Irish Stock Exchanges, has decided to extend the bidding period for the farm-out of the Ruvuma PSA. The company decided to extend the bidding period following strong interest shown by various parties.

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