The company, which is listed on the Dar es Salaam Stock Exchange, yesterday declared Force Majeure – a legal clause which removes liability from the company for not fulfilling a contractual obligation due to unforeseeable circumstances – saying the process of reviewing the existing Production Sharing Agreements (PSAs) is unclear
Dar es Salaam. Swala Oil and Gas (Tanzania) PLC is anticipating delays again of its drilling programme as the government is reviewing contracts with the investors.
The company which is listed on the Dar es Salaam Stock Exchange yesterday declared Force Majeure - a legal clause which removes liability from the company for not fulfilling a contractual obligation due to unforeseeable circumstances - saying the process of reviewing the existing Production Sharing Agreements (PSAs) is unclear.
Swala planned to drill the Kilosa-Kilombero PSA this year but suspended it until the review process concludes.
“Until that process has been concluded, the Joint Venture does not have the basis to ascertain what impact -if any – it may have on the timing and approach to not only the exploration drilling but to any subsequent development that may follow a successful exploration campaign,” the company stated.
“Whilst we do not expect any significant or material changes to the PSA as a result of this review, the overall impact is to delay investments until the process is resolved. Until such time, the PSA will remain in Force Majeure whilst the Joint Venture maintains a readiness to re-commence its drilling commitments once all issues are resolved,” said Swala CEO Dr David Mestres Ridge. In February this year, Permanent Secretary in the Ministry of Energy Hamisi Mwinyinvua confirmed to The Citizen that the review was ongoing and the government would embark on talks with potential investors at the completion of the exercise handled by the office of the Attorney General.
In 2018, Swala resolved the issues of permitting that had prevented access to, and drilling operations in, the Kilosa-Kilombero area. In late 2018 the tendering process commenced in January 2019 it selected a drilling team and started planning the 2019 drilling campaign.
However, towards the end of January 2019, it was advised by the Ministry of Energy that all matters relating to the licence extension would be notified to the operator once the government had concluded a review of existing PSAs.
