...Halts acquisition of PanAfrican Energy, pending consensus on key issues
Tanzania Petroleum Development Corporation (TPDC) says it’s unaware of any imminent takeover of PanAfrican Energy by Swala Oil and Gas.
TPDC, the licence holder for all gas and oil blocks in the country, including Songo Songo gas fields, is allegedly neither informed nor involved in the ongoing discussions to have Swala Oil acquiring stake in Orca’s Exploration Group’s Pan- Africa Energy Corporation. According to the national oil and gas sector overseer, there are pending disputed contractual issues between itself and PanAfrican Energy Tanzania.
The disputes include the recovery of capital and payment of taxes for gas sold in Dar es Salaam, among others. “As the licence holder for Songo Songo, we ought to be informed on any development which may affect implementation of the Production Sharing Agreement (PSA) between TPDC and PanAfrican Energy...the acquisition process should bhalted until the government is satisfied of the development.
“TPDC is ready to engage in discussions with any investor wishing to invest in the oil and natural gas sub-sector provided the laws and regulations of the country are adhered to,” TPDC acting Managing Director Engineer Kapuulya Musomba told reporters in Dar es Salaam yesterday. TPDC stance follows an advert by Swala Oil and Gas Tanzania Plc on its subsidiary Swala (PAEM) Limited’s intention to acquire shares in PanAfrica Energy Tanzania (PAET). Way back in 2001, TPDC and PAET signed the PSA for the Songo gas fields in Lindi region, for development of additional gas supply.
The agreement is set to expire in the next seven years after which it can be renewed. But, TPDC is the licence holder for all natural gas and oil blocks where exploration and development of the resources are taking place as per Petroleum Act of 2015. “There are issues to sort out between TPDC and PAET, among others, we contest the figures released by the company on recovery of its capital in upstream operations as per the PSA.
“Another issue is computation of charges and taxes for gas sold in Dar es Salaam, the PSA provides different computation for upstream and downstream operations and this is among issues which are being disputed,” Engineer Musomba explained. In Dar es Salaam, PAET supplies gas to over 30 industries through a 50-kilometre pipeline, which was constructed and owned by the government of Tanzania. It as well supplies gas for electricity generation to Ubungo in the city.
The Songo Songo natural gas licence area covers approximately 170 square kilometres and is located on the western part of Songo Island, 15 kilometres off Tanzania’s coastline and about 200 kilometres south of Dar es Salaam. Gas from the Songo Songo Island plant is transported by a 25 km 12-inch marine pipeline and a 207 km 16-inch land pipeline that extends north along the coast to Dar es Salaam.
According to media reports early this year, Swala Oil and Gas Tanzania announced its intention to intensify its presence in the country by buying 20 per cent stake in the Orca’s Exploration Group’s PanAfrican Energy Corp. The firm noted further that the bid to acquire the stake at 130 million US dollars, awaits a shareholding meeting.
The deal is expected to provide Swala with part ownership of PAET, which holds exploration and production rights for natural gas in the Songo block, in partnership with TPDC.
“This arrangement ultimately results in the benefits of over 20 per cent of Orca’s Tanzania business being indirectly owned by Tanzanian shareholders,” the Chief Executive Officer (CEO) of Swala Oil and Gas, Dr David Mestres Ridge, was quoted as saying. In August last year, Swala Oil and Gas, said that it was looking to invest up to 130 million US dollars in the Mauritius-registered PanAfrican Energy (PAEM) for a minority stake.
Orca stated that it cannot guarantee that the ongoing discussions will result in a definitive agreement. According to Orca, any possible investment from Swala is not likely to impact the management or operation of PanAfrican Energy Tanzania, its operating subsidiary and a wholly-owned subsidiary of PAEM.
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