Gas-Rich Tanzania Plans To Raise Royalties

Tanzania plans to raise royalties on gas and demand signature bonuses for energy contracts as the east African nation tries to secure bigger benefits from major offshore discoveries.

Tanzania recently tripled its estimated gas reserves and is fast becoming a regional energy hub after finds by Norwegian oil company Statoil, U.S. group ExxonMobil and Britain’s BG Group and its partner Ophir Energy.

Energy and Minerals Minister Sospeter Muhongo said royalties on gas production would rise from 12.5 percent to an unspecified level and the new signing fee would be introduced under a new gas policy, masterplan and law now being drafted.

In a presentation to parliament, he said it would take effect in 2012/13.

Tanzania is one of the world’s poorest countries. Like its east African neighbours, it is now positioning itself for a gas bonanza.

Last month, it raised its estimate of recoverable natural gas reserves to 28.74 trillion cubic feet (tcf) from 10 trillion.

Muhongo said Tanzania would launch a new licensing round in Houston, Texas, in September for additional oil and gas exploration blocks in its deep-sea area.

“The government will review existing contracts and conduct a detailed evaluation before entering into new production sharing agreements for oil and gas to ensure national interests are upheld,” he said.

Reuters