Petroleum Act of Tanzania (2015)

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Overview

The recently enacted Petroleum Act of 2015 is one of the main Acts governing the extractive industries sector in Tanzania. The Act covers the extraction of both oil and natural gas. The Petroleum Act provides for regulation of upstream, midstream and downstream petroleum activities, the establishment of the Petroleum Upstream Regulatory Authority (PURA) and the establishment of the National Oil Company. Moreover, it is supposed to secure the accountability of petroleum entities and to provide for other related matters.[1] The Petroleum Act together with the Tanzania Extractive Industry (Transparency and Accountability) Act and Tanzania Oil and Gas Revenue Management Act were tabled before the National Assembly under a certificate of urgency in June 2015. Despite controversies surrounding the bills, the National Assembly passed the three Bills in readiness for presidential assent into law. Subsequently, on 4 August 2015, President Kikwete assented to the laws.[2]

Institutions

Oil and Gas Bureau

The Act establishes an Oil and Gas Bureau within the Office of the President. The Bureau will advise the Cabinet on strategic matters related to the oil and gas sector.[3]

Petroleum Upstream Regulatory Authority

The Petroleum Upstream Regulatory Authority (PURA) will be a body with its own legal personality. Its functions will include advising the Minister of Energy and Minerals with regard to negotiations of the Production Sharing Agreements (PSAs) and other contracts with international oil and gas companies and implementing local content in the petroleum sector. PURA will also be responsible for processing, granting, renewing, suspending and cancelling of exploration, development and production licences.[4]

National Oil Company

The Tanzania Petroleum Development Company (TPDC) is designated as the official National Oil Company (NOC). The major role of the NOC will be to regulate the commercial aspects of the petroleum sector in upstream, midstream and downstream operations. The NOC will participate in petroleum reconnaissance and the development of projects. Moreover, the NOC will advise the government on matters relating to the petroleum industry. The government will hold a 51 percent stake in the company.[5]

EWURA

The Petroleum Act establishes the Energy and Water Utilities Regulatory Authority (EWURA) as regulator of midstream and downstream activities. Its functions will include the issuing, renewal, suspension and cancellation of construction approvals and operational licences, the collection of fees and levies for the petroleum sector and approval of applications for tariffs and prices. [6] A further role for EWURA is to promote local content by advocating for the use of local goods and services produced and provided in Tanzania throughout the oil and gas value chain.[7]

Change of Petroleum Permit and Permits Extensions Duration

The new Act reduces the duration of the validity of extended Exploration and Development licences. An exploration licence may be extended for the first time for three years and for the second time for two years following an application by the holder of such a licence. Under the previous Petroleum (Exploration and Production) Act of 1980, a four-year licence period was followed by another four years as the first extension but the second extension was for three years. The power to grant these extensions lies with the Minister of Energy and Minerals under the new legislation as it was previously. [8]

Transparency

The Act makes it a requirement for the Minister of Energy and Minerals, PURA and EWURA to ensure transparency in the oil and gas sector. PURA is allowed to make “details of all agreements, licences, permits and any amendments to the licences, permits or agreements whether valid or terminated” and “details of exemptions, variations or suspensions of conditions of licence and permit” available to the public, for a fee. The Act also requires EWURA to establish a National Petroleum and Gas Information System (NPGIS). Most of this system shall be available for inspection by the public. Part of the NPGIS will constitute a Central Registry of Petroleum Operations (CRPO) containing information on: (a) petroleum supply and use by type, quantity and region; (b) petroleum importation by type, quantity and source; (c) petroleum exportation by type, quantity and destination; (d) refinery products by type, quantity and source; (e) petroleum or petroleum products in transit; (f) a record of all licence applications, grants, variations, transfers, suspensions and cancellations; and (g) all relevant information on the holders and their operations and installations.[9]

References

  1. The Petroleum Act, 2015”, “Government of Tanzania”, retrieved 09 September 2015.
  2. Tanzania’s new regime oil gas laws”, “Breakthrough Attorneys”, retrieved 09 September 2015.
  3. Tanzania’s new regime oil gas laws”, “Breakthrough Attorneys”, retrieved 09 September 2015.
  4. Tanzania: Tanzania Bill establishing the Petroleum Act 2015”, “mondaq.com”, retrieved 09 September 2015.
  5. Tanzania’s new regime oil gas laws”, “Breakthrough Attorneys”, retrieved 09 September 2015.
  6. Tanzania: Tanzania Bill establishing the Petroleum Act 2015”, “mondaq.com”, retrieved 09 September 2015.
  7. Tanzania: Tanzania Bill establishing the Petroleum Act 2015”, “mondaq.com”, retrieved 09 September 2015.
  8. Tanzania’s new regime oil gas laws”, “Breakthrough Attorneys”, retrieved 09 September 2015.
  9. Tanzania extractive industries draft laws- transparency”, “mtega.com”, retrieved 09 September 2015.