IMPLEMENTATION of the provisions of the National Natural Gas Policy whose draft is currently in circulation will affect the Production Sharing Agreement signed over a decade ago between Orca Exploration and Tanzania Petroleum Development Corporation (TPDC).
In its latest six month report for 2014, the British Virgin Islands based company whose subsidiary, PanAfrica Energy extracts natural gas at Songo Songo, said during the period it also failed to reach an agreement with TPDC on additional gas sales which further affects its operations.
"These forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Orca's control, and many factors could cause Orca's actual results to differ materially from those expressed or implied in any forward-looking statements made," the company said.
The report further noted that such known and unknown risks also include risk that the contingencies related to the development work for the full field development plan for Songo Songo are not satisfied and that of the onstream date for the National Natural Gas Infrastructure Project is delayed.
"Failure to obtain funding for full field development plan for Songo Songo and the risk that the company will be required to pay additional taxes and penalties," the report noted.
The company's report to June 30, 2014, also said there is risk that the cost pool dispute will not be resolved in favour of Orca while the impact of general economic conditions in the areas in which Orca operates including changes in laws and regulations including the adoption of new environmental laws.
"Lack of availability of qualified personnel or management; fluctuations in commodity prices; foreign exchange or interest rates; stock market volatility; competition for, among other things, capital, drilling equipment and skilled personnel," the report stated.
In addition, there are risks and uncertainties associated with oil and gas operations, therefore Orca's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forwardlooking estimates.
"The Protected Gas is owned by TPDC and is sold under a 20-year gas agreement (until July 2024) to Songas Limited. Songas is the owner of the infrastructure that enables the gas to be delivered to Dar es Salaam, which includes a gas processing plant on Songo Songo Island, 232 kilometres of pipeline to Dar es Salaam and a 16 kilometre spur to the Wazo Hill Cement Plant," the report pointed out.
Songas utilises the protected gas at a maximum 45.1 million cubic feet per day on any given day, non-cumulative, as feedstock for its gas turbine electricity generators at Ubungo, for onward sale to the Wazo Hill cement plant and for electrification of some villages along the pipeline route.
The company receives no revenue for the protected gas delivered to Songas and operates the field and gas processing plant on a 'no gain no loss' basis.
Under the PSA, the company has the right to produce and market all gas in the Songo Songo field in excess of the protected gas requirements, the report noted.