Tanzania could lose out on oil and gas discoveries, says audit report

Oil and gas investors are calling for a review over the Tanzanian government’s local content obligations contained in Petroleum Act 2015.

According to the East African, the companies through their organisation, Oil and Gas Association of Tanzania (Ogat), have presented their arguments against the regulation to the Energy and Water Utilities Regulatory Authority (Ewura).

It is reported that the companies are uncomfortable with the local content requirement in Tanzania and have requested a review.

In January, energy minister Prof Sospeter Muhongo, directed Ewura to hold a stakeholders’ consultation meetings on the draft petroleum regulations 2017, of which the companies are rejecting, stating that it’s costly, media reported.

“Our aim is to help the government come up with a realistic regulation on local content. All the concerns are taken into account in the process, backed by an extensive study on best practices,” senior official at Ophir Energy, Halfani Halfani, said.

Ophir Energy, a UK-based oil and gas exploration company, is among the investors that are backing a $30 million liquefied natural gas project to be situated at Likong’o Village in the Lindi Region.

Draft regulation

The draft regulation states procedures to be followed by foreign companies to guarantee compliance with local content requirement, media reported.

According to the proposed regulations, before engaging in any petroleum-related activity, a contractor must submit a local content plan for approval.

The plan must have details of employment, training, succession plans, research and development, procurement of goods and services and technology transfer. The regulations also call for submission of quarterly implementation reports.

“If the regulations are implemented, companies will be spending most of their time focusing on meeting requirements for local content compliance at the expense of their primary undertakings,” Halfani said.

He added: “It is actually like the government managing the day-to-day activities of oil companies.”

He further noted that the draft local content regulations unfairly target foreign oil companies.

Halfani concluded. “There is no mechanism in the proposed regulation to hold government officials accountable for failure to meet local content obligations on their part.”

https://www.esi-africa.com/news/tanzania-investors-contest-oil-and-gas-draft-regulation/