History of Tanzania's Oil and Gas Industries

According to the Ministry of Energy and Minerals (MEM), the exploration of Oil and Gas in Tanzania has been underway since 1952, with the first natural gas discovery made in 1974 in Songo Songo, Kilwa district in Lindi Region. Eight years later, in 1982, the second discovery was made in Mtwara Region, bordering Lindi, at Mnazi Bay. The commercialisation of the dual discoveries triggered on-shore and off-shore exploration. The exploration was being done by the multinational petroleum companies. There have been other significant discoveries in Mkuranga, Kiliwani North and Ntorya. The Tanzania Petroleum Development Corporation (TPDC), categorises the history of Oil and Gas in Tanzania in five phases: Phase I: 1952-1964, Phase II: 1969-1979, Phase III: 1980-1991, Phase IV: 1992-1999, and Phase V: 2000 to-date as explained below.

Phase I: 1952-1964
It was characterised by a concessionary system where British Petroleum (BP) and Shell were awarded concessions along the coast. This includes the Islands of Mafia, Pemba and Zanzibar (Unguja). The drilling of wells did not discover commercially viable hydrocarbon.

Phase II: 1969-1979
This phase was characterised by two important events in the history of Oil and Gas in the country. First was the establishment of the State owned Company, the Tanzania Petroleum Development Corporation (TPDC) in 1969, and second a significant discovery of gas at Songo Songo. After the establishment of TPDC, the first Production Sharing Agreement (PSA) was signed between TPDC and AGIP (Azienda Generale Italiana Petroli – General Italian Oil Company) on the concessions that were being managed by BP/Shell during the first phase. In 1973, AGIP partnered with AMOCO and drilled five wells – three onshore and two offshore. Other literature indicates that a total of six wells were drilled by AGIP and AMOCO – three onshore and three offshore. This led to a significant gas discovery at Songo Songo in 1974. The discovery was confirmed by TPDC in its three well programme implemented from 1975-79. From 1978, TPDC ventured into exploration, conducting onshore and offshore seismic programmes. The onshore programmes covered Ruvu, Kimbiji/Bingwa, Pemba, Mafia and Ruvuma area while the offshore included Songo Songo, Pemba and Zanzibar.

Phase III: 1980-1991
The beginning of this phase saw the enactment of the Petroleum (Exploration and Production) Act of 1980, and the discovery of gas in Mnazi Bay. Out of the five phases, most of the drilling occurred in this phase being a result of the enactment of the Petroleum Act and high oil prices in early 1980s. The state company, TPDC, involved in the development of Songo Songo, drilling two wildcats (an exploratory oil/gas well) at Kimbiji East-1 and Kimbiji Main 1 wells as well as several seismic programmes. Shell, IEDC (International Economic Development Corporation), and Camarco Group, Elf and AMOCO were all awarded exploration licenses in oil and gas. Shell and later on Esso were assigned five licenses covering the Ruvu and Selous Basins in 1981.

Phase IV: 1992-1999
The fourth phase was characterised by little exploratory activities in its first years, lack of active concessions, and initiatives by authorities to further develop the Songo Songo gas field through fiscal and technical agreements. The state owned company, TPDC and TANESCO (Tanzania Electric Supply Company), in collaboration with Canadian companies, Ocelot and Trans-Canada Pipelines, were actively engaged in the Songo Songo gas field (development, transmission and utilization). The issuance of exploration licenses in 1995 in the coastal basins to international companies including Tanganyika Oil Company, Exxon Mobil, Shell, KUFPEC (Kuwait Foreign Petroleum Exploration Company), and Amoco accelerated the exploration activities. Tanganyika Oil Company drilled two wells in the Mandawa Basin in 1996/97. Exploration agreements were signed between TPDC with Canadian companies Antrim Resources (now Atrim Energy Limited) and Canop World-wide, and Ndovu Resources of Australia.

Phase V: 2000 to-date
Several companies were licensed to operate during this period. These include Petrobras (Block 5, 2004), Ophir Energy (Block 1, 2005), Ophir Energy (Blocks 3, 4, 2006), Statoil (Block 2, 2007), Dominion (Block - 7, 20), Petrobras (Block - 8, 2012). The licensing was followed by exploration and drilling of wells by BG (Blocks - 1, 2, 3), Statoil (Block - 2) and Petrobras (Block - 5), which led to the significant discovery of gas in blocks 1, 2, 3 and 4. In March 2012, Statoil and Exxon Mobil made the biggest offshore gas reserve discovery (Zafarani field) off the coast of Indian Ocean. Songo Songo and Mnazi Bay went into full commercial operation in 2004 and 2006 respectively. Up to June 2012, there were 26 Production Sharing Agreements (PSA) signed with 18 oil exploration companies. In an effort to manage the sector, the government adopted the The National Natural Gas Policy in 2013. The policy highlights key challenges associated with management of natural gas and how to facilitate more effective management of the industry. Additionally the government published a draft Local Content Policy (LCP) in 2014, the draft Petroleum Exploration Policy 2014 and the draft National Energy Policy 2015, the Oil and Gas Revenues Management Act 2015, the Petroleum Act 2015 and the Tanzania Extractive Industries (Transparency and Accountability) Act 2015.

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