Tanzania receives five bids for oil, gas blocks

Wed May 21, 2014 11:33am EDT

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By Fumbuka Ng'wanakilala

DAR ES SALAAM, May 21 (Reuters) - Tanzania, a hotspot for natural gas exploration, has received five bids for just half of the eight oil and gas blocks it offered in its latest bidding round, its upstream regulator said on Wednesday.

Tanzania, which has made big discoveries of natural gas off its southern coast, had offered seven deep-sea offshore blocks and one block in Lake Tanganyika.

China's top offshore oil producer, CNOOC Ltd, and Russia's state-run Gazprom were among companies that submitted bids for the blocks on offer in the fourth round.

Statoil and ExxonMobil, which have made big gas discoveries off Tanzania, have submitted a joint bid for one of the offshore blocks.

"The evaluation process will start immediately and we will announce winners of the bids as soon as possible within the timeframe of the fourth licensing round," Yona Killagane, managing director of the state-run Tanzania Petroleum Development Corporation (TPDC), told Reuters.

Killagane did not say when the winners will be announced. The licensing round closed on May 15.

CNOOC, a newcomer in Tanzania's rapidly-expanding oil and gas industry, will battle with Statoil and ExxonMobil for offshore block 4/3A, which covers 2,620.3 square kilometres.

Gazprom has applied for block 4/3B offshore Tanzania, covering an area of 3,045 square kilometres.

Abu Dhabi state-owned investment fund Mubadala has applied for offshore block 4/2A, which covers an area of 3,630 square kilometres, while another UAE firm, Ras Al Khaimah Gas LLC, has submitted a bid for the Lake Tanganyika North block, with a size of 9,670.2 square kilometres.

Four offshore blocks, 4/3B, 4/4A, 4/4B and 4/5B, did not attract any bids, TPDC said.

Britain's BG Group and Ophir Energy, which have been at the forefront of exploration in Tanzania, did not submit any bids for the blocks on offer.

The deep sea offshore blocks are located in water depths of 2,000 to 3,000 metres adjacent to proven prospective blocks, while the Lake Tanganyika North block is in a water depth of 1,500-metres along the east African rift system, the government said in its bidding round announcement.

Tanzania has so far signed 25 production sharing agreements (PSAs) with some 17 international energy companies, including BG Group, Statoil, Brazil's Petrobras, Royal Dutch Shell, Exxon Mobil and Mubadala Petroleum.

Winners of the latest bidding round would be subjected to new PSA terms that experts said toughen some of the conditions for energy firms seeking to explore and develop the east African nation's big gas prospects.

Tanzania has 46.5 trillion cubic feet (tcf) of proven natural gas reserves, up from 42.7 tcf previously, and expects exploration off its southern coast will result in more finds. (Editing by George Obulutsa, editing by David Evans)

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