12 October 2017

Tanzania Signs Oil Exploration Deal With Uganda

Tanzania has entered into an agreement with Uganda to help in the search for oil in the Eyasi Wembere Basin and Lake Tanganyika. The two countries already have a crude pipeline deal.

This puts to doubt Tanzania's previous agreement with Democratic Republic of Congo signed a year ago to work on a joint oil exploration in Lake Tanganyika.

DR Congo has discovered oil in Lake Albert on its border with Uganda and it hopes to find oil in Lake Tanganyika.

Experts from Uganda and Tanzania are now working together and have already gathered geological and geophysical information in Eyasi Wembere basin in central Tanzania.

In August, when Tanzania's President John Magufuli and Uganda's President Yoweri Museveni laid foundation stones for the Hoima-Tanga oil pipeline, President Magufuli asked President Museveni to provide his country's expertise in oil exploration to Dar es Salaam. The request took only a month to be implemented.

The groundwork began two weeks ago when technicians from the Tanzania Ministry of Energy and Minerals, Tanzania Petroleum Development Corporation and Petroleum Upstream Regulatory Authority and Ugandan experts toured the Eyasi Wembere basin and Sekenke hills.

Oil deposits

After the tour, Uganda's acting Permanent Secretary of Energy and Mineral Development of Uganda Robert Kasande and his Tanzania counterpart, deputy Permanent Secretary in the Ministry of Energy and Minerals Juliana Pallangyo said geological and physical characteristics of the area suggested presence of oil deposits.

The team examined rocks around Sekenke in Singida region central Tanzania and Mwanzugi and Kining'inila villages in Singida and Tabora regions.

Mr Kasande said the team will send their recommendations to the Tanzanian government and that could lead to further exploration and oil drilling of test wells in the area. Their report also includes a proposed work plan, budget and equipment needed.

He said he is optimistic of oil finds in the area partly because other countries that share the basin such as Kenya and Uganda have discovered oil deposits in the same basin.

Should Tanzania find oil, it will be drilled and transported through the Hoima-Tanga pipeline for export from the Tanga port.

Gas reserves

Tanzania has the second largest natural gas reserves in East Africa with 57.27 trillion cubic feet (tcf) so far discovered, behind Mozambique with 100tcf.

However, the country is a net importer of petroleum products. During the 2014-2015 financial year, the country imported a total of 4.6 billion litres of petroleum products.

On its part, Uganda discovered large oil reserves in 2006 near Lake Albert in the western part of the country. Total -- the French oil company that is developing the fields along with Tullow and China National Offshore Oil Corporation -- expects the project to produce oil by 2020. The area is estimated to have 1.7 billion recoverable barrels of oil.

Dr Pallangyo said Tanzania is keen to exploit Uganda's experience in the oil industry while Kampala could benefit from Tanzania's pipeline expertise given that the country manages the Tanzania-Zambia pipeline and the Songo Songo gas pipeline.

Last year, Uganda chose the Tanzanian route for its 1,115km crude oil pipeline instead of the Kenyan deal that was a shorter 900km route. Tanzania offered Uganda several incentives such as tax relief, a tax holiday for 20 years and a free corridor for construction of pipeline infrastructure.

Tanzania

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