TPDC to engage in oil, gas exploration

Dar es Salaam. Tanzania is looking for a better way of benefiting from oil and natural gas.The Tanzania Petroleum Development Corporation (TPDC) is planning to start participating fully in oil and gas as the government seeks to optimise its position in the industry.

The state-run agency seeks to take part in all stages -- exploration, development and production -- instead of the current situation where it only participates in the development.

Even as the 45-year-old corporation remains confident with its future involvement including distribution of oil and gas and related services, some economists are worried by the government decision to allow TPDC to engage in all stages including the risky exploration.

At a media workshop in Bagamoyo recently, TPDC officials expressed confidence over the government move to allow it to do so, saying that the decision would improve the country’s participation in the industry.

“TPDC’s full participation in the exploration, development and production is a bold decision. It will optimise government participation in the industry. So, soon you will see it doing the job being done by other big companies in the industry,” said TPDC acting exploration manager Kelvin Komba.

The corporation is also confident that it will do the job through partnership with other industry giants although talks have not yet started with any of the companies.

TPDC holds shares in the Songo Songo Gas-to-Electricity and Mnazi Bay gas development projects. However, some economists are cautious with TPDC’s participation, especially in the risky exploration stage which is also expensive.

Prof Delphin Rwegasira of the University of Dar es Salaam’s Economics Department, says TPDC should primarily remain in its supervisory role and participate at development stage only as it’s doing now.

“Building on the experience of public entities’ performance in Tanzania, I doubt if spending public finance on the unpredictable exploration is justifiable. TPDC should make sure that we get good contracts and manage the revenue from oil and gas,” he says.

He says the exploration stage should be left to well-capitalised firms from within and outside the country with TPDC ensuring there’s a good investment environment. “Exploration is very tricky and expensive. There is no guarantee to find gas or oil resources. By the way, do we have enough experts in that area?” asked Prof Rwegasira.

Similar fears were raised by journalists during a media workshop in Bagamoyo recently whereby TPDC acting managing director James Andilile allayed them.

He cited an example of Brazilian Petrobras, Norway’s Statoil and UK’s BG which are owned by their respective governments.

“If all these companies are doing well in the industry and they are state-owned, why not TPDC? I can assure you that it’s going to perform better as well,” boasted Mr Andilile.

Following the newly inaugurated TPDC organisation structure, the Upstream Department is now composed of three units: Exploration, Production and International.

The International Unit allows TPDC to enter into joint ventures (JVs) with any international project provided the project attracts national interests, says Mr Komba.

“TPDC is now evaluating possible opportunities to fully undertake exploration activities nationally and internationally. Due to the nature of this industry, which demands both high technology and capital intensive, TPDC is aspiring to operate under a JV arrangement with well-established international oil companies that have appropriate technology and financing capacity,” says Mr Komba.

“The objective is to make TPDC strong in that aspect. The JV arrangement will entail capacity building, transfer of technology and financing aspect. It is through this model, TPDC will eventually be able to operate nationally and internationally. Furthermore, this concept will also allow TPDC to register in stock markets,” he adds.

Tanzania has discovered 50.5 trillion cubic feet (TCF) of natural gas deposits by the end of July. They included 8TCF noticed onshore and 42.5TCF from the deep sea of the Indian Ocean.

The gold-rich country hopes to raise its gas deposits as it expects to drill 13 more wells in 2014 alone, according to TPDC.