September 18, 2012 / 5:35 PM / 7 years ago

UPDATE 2-Tanzania says will not revoke any oil and gas PSAs

* Energy minister says PSAs will be respected
    * Tanzania drafting a new gas policy
    * East Africa a new hot spot in oil and gas exploration

    By Fumbuka Ng'wanakilala
    DAR ES SALAAM, Sept 18 (Reuters) - Tanzania will not revoke
existing oil and gas contracts, its energy minister said on
Tuesday, two days after he was widely reported in local media
saying unfavourable deals would be scrapped.  
    East Africa is a new hotspot in hydrocarbon exploration
after substantial deposits of crude oil were found in Uganda in
2006 and major gas reserves were discovered in Tanzania and
    Some of the world's biggest energy firms jostling for space
in the region are finding themselves negotiating with
governments that are themselves learning how to negotiate energy
    Energy and Minerals Minister Sospeter Muhongo confirmed a
review of all Production Sharing Agreements that had been
ordered but said this was because east Africa's second biggest
economy was preparing a new gas policy. 
    "We are not trying to stop any business. We will not revoke
any contract, we will respect all contracts," Muhongo told
    There was no immediate reaction from the companies exploring
in Tanzania, including Norway's Statoil, Ophir Energy
 and BG Group, which have all made significant
offshore natural gas discoveries offshore.
    Muhongo said the review was procedural. It was critical, he
said, officials were familiar with the terms of old contracts to
avoid making mistakes as they drew up new deals. 
    Earlier this month, the state-run Tanzania Petroleum
Development Corporation (TPDC) delayed a licensing round for
nine deep-sea oil and gas blocks previously set for this month
until a parliamentary vote on a new gas policy in October.
    "Right now as a country, we are in the gas boom and we don't
have gas policy in place. 
    In June, Tanzania - which already uses some of its natural
gas to produce electricity and to power industry - nearly
tripled its estimate of recoverable natural gas resources to up
to 28.74 trillion cubic feet (tcf) from 10 trillion following
recent major discoveries.
    Muhongo said he had been misquoted in Tanzania's local media
over the weekend.
    "The review of the 26 existing contracts should not frighten
anyone," the minister said.
    Recent gas strikes off east Africa's seaboard have led to
predictions the region could become the third largest exporter
of natural gas on the planet.
    Muhongo denied Tanzania was looking to shift the goal posts.
    "Our country is reviewing its policy. Is that something
new?" he said.
    "We want both the companies that are investing in the
country and Tanzanians to benefit from the oil and gas
    The speed with which east African countries like Tanzania
adapt to their newfound resources could determine whether the
region lives up to its reputation as the latest great oil and
gas frontier, with big implications for global energy flows as
well as regional energy flows.
    "This is completely new business to us. We are learning,"
Muhongo said.
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