A Review of the Nigerian Energy Industry

Tanzania terminates talks with oil firm over license

Oil output10 March 2014, Dar es Salaam – A decision by Tanzania Petroleum Development Corporation (TPDC) to terminate talks with Swala Oil and Gas (Tanzania) over the Eyasi license is raising some queries.

Last week, Swala Managing Director, David Ridge told East African Business Week, “That is indeed TPDC’s stated position. Our view is that the matter is not as clear cut,” he said.

Ridge said TPDC knew that in advance from the joint venture agreement that any time one of the joint bidding partners may withdraw so there was no reason to terminate the negotiations.

At that stage, Ridge said his company had invested $300,000 in direct costs.

“The bidding agreement allowed either party to withdraw at any stage and was accompanied to the bidding agreement which was one of our submitted documents to TPDC,” Ridge said.

The joint venture, Swala and Pura Vida Energy NL both from Australia was a fifty-fifty deal, but Pura later pulled out. They said they wanted to focus on their newly acquired exploration rights in Morocco, Gabon and Madagascar.

Because of these developments, TPDC says, the pre-negotiations would no longer be acceptable as the JV ceased to exist on January, 2014 thus Lake Eyasi-Wembere area is therefore open and will be available for bidding.

In a statement on February, 21, TPDC’s Managing Director, Yona Killaghane said the termination of pre-contract negotiations for Production Sharing Agreement in the Lake Eyasi-Wembere Basin was mainly due to the withdraw of one party from the joint venture.

“After the withdrawal of Pura Vida Energy NL, the 50% interest of the joint venture could not support the application,” TPDC said.

TPDC reaction was a result of the February 14, Swala Energy Limited issuing a statement to the Australian Stock Exchange that TPDC has terminated the negotiations for a Production Sharing Agreement.

However, Ridge told East African Business Week: “We have taken the view that our interests are better served by focusing on our listing, the existing assets and preparing for the re-tendering of Eyasi as advised by TPDC on February 21. Our efforts are therefore aimed more at our impending listing.”

Ridge said in a statement (Feb, 14) that SOGTP disagrees with TPDC’s interpretation and has advised TPDC that it will seek advice on challenging this decision.

“We are disappointed that TPDC has reached such a questionable decision, especially considering SOGTP’s track record in Tanzania over the past two years,” he said.

Swala Energy is an Australian oil and gas company with assets in Kenya and Tanzania. Swala’s holdings are in the East African Rift System with a total net land package in excess of 15,000 square km.


– East African Business Week

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