Swala Energy Limited (Swala) has recently announced that it has received the consent from the Tanzanian Ministry of Energy and Minerals (MEM) to consign a 50% stake of its interest in the Kilosa-Kilombero and Pangani licenses in the east region of the country.
Swala which currently holds a 50% stake in both licenses under a Production Sharing Agreement (PSA) approved by the Tanzanian Government in 2012, would transfer half of its stake on each of the licenses to Tata Petrodyne Limited (TPL), an arm of Indian Tata Group company engaged in the exploration and production of crude oil and natural gas in Asian countries.
Under this agreement, TPL would invest a maximum of USD 2.5 million and USD 2.1 million for the initial wells in Kilosa-Kilombero and Pangani licenses while drilling costs would be shared on a 50-50 basis in line with the final stakes.
According to Swala’s website, the total costs for the wells in both licenses have been estimated below USD 10 million.
The company is currently waiting for the share transfer’s Fair Competition Commission’s (FCC) approval to start construction works on both wells.
Swala’s CEO, Dr. David Ridge, explained in a statement that the rapid approval by the Tanzanian Petroleum Development Corporation (TPDC) and MEM, is the reflect of the Government’s desire to encourage activity in the country’s energy sector, so the FCC.
Having completed its program of sounding tests as part of the initial three years contract which ended in 2014, Swala’s findings indicate that in the total area of over 34,000 square km between both licenses, the reserves of oil are estimated to be over four billion barrels.
At a current price of around USD 39 per barrel according to Bloomberg, the reserves represent a total value of USD 156 billion, enough to cover the country’s demand on foreign energy for 53 years.
