BY EMMANUEL ONYANGO
26th October 2013
President Jakaya Kikwete yesterday told local businessmen that they can’t afford costs of gas and oil exploration.
He said that already licensed foreign companies spend approximately $ 100 million (Sh. 160 bn/-) to explore gas and oil potential reserves from a single gas bloc sitting in a water depth of about 2 km by using highly sophisticated technology and modern equipment which an ordinary local firm cannot afford to purchase.
He made the remarks the launching of the fourth Tanzania deep offshore and Lake Tanganyika North Licensing Round 2013 to signify invitation of companies to compete in the biding process of the gas and oil exploration in the country.
The occasion was the first to be held in the country, organized by the Ministry of Energy and Minerals in collaboration with the Tanzania Petroleum Development Corporation (TPDC), and attended by local and foreign oil and gas companies.
Others in attendance were regional commissioners for Lindi, Mtwara, Ruvuma, Katavi and Mbeya including civil society groups from the once troubled regions of Mtwara and Lindi where natural gas is being harnessed.
The president rejected criticisms that the government is not working for the welfare of Tanzanians and hinders their being engaged in exploration activities, underlining that the government is working to create a conducive environment for investors and once production starts, local companies would be fully involved.
Earlier the president explained how the exploration is done by companies which incur huge expenses in upstream activities prior to starting production, with money spent refunded to the investing company before signing an agreement on sales. The government would get 65 percent and investors remain with 35 per cent. He also said that the production sharing might vary and reach 75 for the government after deductions are made on expenses incurred during exploration, noting that TPDC holds all the shares for oil and gas for the government, in which case local companies would later be asked to buy shares.
He queried claims over the ownership of the shares which assert that it would appropriate to let them be acquired by the private sector to run the business to clear such doubts, as otherwise the private has to do their own exploration and incur such expenses.
He urged oil and gas exploration companies to abide by safety rules and standards to adhere to hygienic requirements in exploration activities.
Meanwhile, hopes by individual Tanzanians to own gas blocks slated for auction were dashed off on Wednesday after the Energy and Minerals minister Prof. Sospeter Muhongo announced that TPDC would stand in on their behalf.
In an interview with journalists in Dar es Salaam on Wednesday this week, the minister said there will be no opportunity for individual Tanzanians to own the eight gas blocks due for sale as they will be represented by TPDC, noting that TPDC has the mandate to represent Tanzanians in their entirety in the gas exploration process.
The government will assist TPDC to run its services commercially, with shares apportioned between investors and TPDC whereby the latter will play a major role in regulating the gas sector.
Meanwhile, the Tanzania Private Sector Foundation (TPSF) expressed great dismay at the sidelining of locals in the auction of natural gas blocks and has proposed a framework that would ensure Tanzanians benefit from the resources.
SOURCE: THE GUARDIAN
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