Ophir Energy in Tanzania

Ophir Energy is an oil and gas firm with operations in Congo, Equatorial Guinea, Senegal, Madagascar, Somaliland, Tanzania and Gabon.. It is listed on the London Stock Exchange (LSE), even though specialist banking and asset management group Investec on August 20, 2014, downgraded its recommendation on Ophir to ‘hold’ from ‘buy’, saying the exploration attractiveness that had made its stock unique when compared to its peers, was no longer tenable. On August 28, 2014, the firm announced that it would reorganize its organizational structure at the top aimed at reducing costs in line with the needs of the business, an exercise that would see it downsize top management positions, by having a leaner Board of two (from 3) executives and non executives also being reduced from six to five.

Ophir Tanzania Operations
Ophir made its first presence in Tanzania in October 2005, when it signed a PSA for Block 1 and holds an 80 per cent stake in Block 7 located to the north of areas with major gas discoveries in Blocks 1, 2, 3 and 4 in the deep offshore basin of Tanzania. The firm applied to increase its stake in Block 3 (from 20 per cent) to 80 per cent with the remaining 20 per cent being retained by Singapore based Pavillion Energy. It has further interests in Block 4 (home to Chewa-1 gas discovery and Pweza-1 gas discovery) where it holds 20 per cent in partnership with Pavilion Energy with a 20 per cent stake and BG Group, who is also the operator, holding 60 per cent. Its other interest in Tanzania is East Pande, with 70 per cent, lying between Songo Songo Gas Field, Ruvuma Basin and Chewa-1 gas discovery and Pweza-1 gas discovery wells (Block-4) where there had been significant natural gas discoveries offshore southern Tanzania. At the end of 2013 Ophir disposed off 20 per cent of its stake in Blocks 1, 3 and 4 offshore Tanzania to one of the latest entrants in the country’s gas and oil exploration operations, Singapore-based Pavilion Energy. It was awarded a 100 per cent interest in Block-1 in 2005 and in 2006, the firm took a 100 per cent control of Blocks 3 and 4, later selling a 60 per cent stake to BG Group who became the new operator. Divesture of the 20 per cent interest saw the Group make a net profit after tax of US$339.1million for six months ended 30 June 2014, in contrast to a loss of US$19.4 million made in a similar period in 2013.

Ophir Energy and Dry Well
After having had a success rate that was almost flawless in its previous drilling operations offshore of Tanzania and in the East African region, Ophir suffered a glitch when it encountered a dry well at Mlinzi Mbali-1 some 210km from the capital city Dar es Salaam in 2013. Despite the hiccup, the southern blocks offshore Tanzania which Ophir has operated with BG Group, have produced close to 2.5 billion barrels of oil equivalent. In October 2014 the company announced its latest gas discovery in Tanzania amounting to 1.03TCF in the Kamba-1 well, in Block-4.

Accusation in Tanzania
In late 2012, an opposition legislator, Mr. Zitto Kabwe, accused Ophir Energy of having bribed its way into the country to acquire exploration licences and that local beneficiaries of this scam had stashed this money in offshore accounts. Kabwe alleged that Ophir used a ‘fixer’, Mr. Moto Mabanga, a Congolese business man, to get the exploration blocks while the firm in collaboration with Mabanga threatened court action against the Member of Parliament. Mabanga took the legislator to task by demanding that he refutes the allegations he had labeled against him. The subsequent defamation case was won by the Congolese business man.

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