pipeline, page-8

Unrelated but good to see the industry getting together to push for improvements.


Oil, gas companies want production sharing agreement gazetted
JAPHET SANGA, 20th September 2009 @ 01:07, Total Comments: 0, Hits: 295

OWING to the expanding group of international companies exploring for oil and gas in the country and its offshore waters, the prospecting companies recently launched an association for mutual co-operation with the government. The association’s spokesperson, Ambassador Isaya Bakari Chialo, expounds the group’s tasks in an interview he granted our Staff Writer JAPHET SANGA. Excerpts…

QUESTION: The Oil and Gas Association of Tanzania (OGAT) was recently launched in Dar es Salaam. Who are the founding members and what exactly does OGAT intend to achieve? ANSWER: The Oil and Gas Association of Tanzania (OGAT) has a cross-section of founding members, especially companies that prospect for oil and gas in the country. The founding members of OGAT are Ndovu Resources (Ireland), Artumus Energy (Canada), Pan African Energy (Canada), Ophir Energy (Australia) and Petrobras (Brazil). Others are RAK Gas (Ras el Khayima), Maurel et Prom (France), Tullow (UK) and StatoiHydro – (Norway). The key objectives include promoting best practice principles in regard to health and safety and protection of the environment in carrying out operations. The Association also aims at speaking for the oil and gas industry on matters of common interest and to increase trust and co-operation between foreign oil and gas operators and the government, as well as other stakeholders in the country’s oil and gas industry. Its other objective is to advise the government and the Tanzania Petroleum Development Corporation (TPDC), on training needs of the industry, as well as encourage education in all aspects.

Q: How will OGAT accelerate exploration of liquid hydrocarbons and gas in the country?
A: OGAT will simplify procedures to reduce costs and time like in the case of permits for Environmental Impacts Assessment, simplify immigration procedures on work permits and co-ordination of use of seismic survey and drilling equipment and time table.

Q: Oil and gas prospecting involves tampering with the environment. How keen is OGAT in ensuring there is minimum impact on the environment during exploration, development, production and all other downstream activities?
A: The oil and gas companies have a corporate and legal obligation that the environment is never adversely affected. The companies also work closely with relevant government bodies such as the TPDC and the National Environment Management Council (NEMC), along with other institutions to ensure best practice methods are adhered to, with a focus on the environment and the communities. District and village governments are fully involved together with farmers, property owners and other stakeholders, even before the start of surveys and drilling activities. There are also Health, Safety and Environment (HSE) experts that assist with the close management of safe environmental work.

Q: To what extent do exploration and service companies assist the local communities within their contract areas? Could you cite examples?
A: It should be understood that the majority of the oil and gas exploration companies are not producing any income, hence only have budgets of expenditure. However, they all do what they can to support the local communities within their contract areas. Foremost, the companies are actively employing local people and it is not uncommon to have an employment base of local Tanzanians well above the 90 per cent of the work force. Companies tend to have their own Social Community Programmes, that are aligned with their own core company values and the communities. Typical programmes might include providing local schools with water wells or water harvesting programmes. Computers, books, desks, chairs are just some of the other things that the oil and gas companies contribute towards educational development. Outreach programmes around the communities, for example, Songo songo – PanAfrican Energy and Ndovu Resources have built a hospital, secondary school, village office and supported provision of electricity within the area. Recently, Artumas created income generating activities to the local communities living along Mnazi bay in Mtwara region, which have made people in the area to realize the importance of environmental conservation. The alternative activities introduced are fish farming, beekeeping and fishing gear provision to 11 villages close to the Mnazi Bay Mtwara Estuary Marine Park.

Q: And what would the international companies prospecting for oil and gas in the country and its offshore waters like the government to do to attract more investors in the energy exploration sector?
A: Being a stable country and which follows the rule of law, Tanzania attracts more foreigners to invest in the country. To ensure a huge and constant influx of investors, the government should create a conducive climate for the industry, like streamlining procedures on tax related matters, suitable arrangements on the gas terms. It should also gazette the Production Sharing Agreement (PSA), to make it known to other stakeholders as this has been a problem, especially when dealing with Tanzania Revenue Authority (TRA) officials. The oil and gas companies have all signed agreements with the government called the Production Sharing Agreement (PSA), that are contractual and make obligations to both the contractor (company) and the Tanzanian government. Yet, some of these obligations are either delayed or not fulfilled with any commitment by the government. To cite an example, the fuel excise and levy refund supported to the oil and gas companies indicate there are still outstanding refunds to be paid back to various companies from 2003. Value Added Tax (VAT) refunds are also slow and have an adverse effect on the companies’ cash flow. Money that could normally be re-invested into further exploration and investment is not done so and this is a tragedy to the oil and gas companies, including the development of Tanzania.