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Tanzania to partner with Algeria in oil and gas joint venture

Out-Law News | 16 Jul 2014 | 2:25 pm | 1 min. read

Tanzania and Algeria are to launch a joint venture company as part of an energy cooperation agreement to start oil and gas exploration in Tanzania, according to Algeria’s state news agency (APS). 

APS said the joint venture between Tanzania’s electricity supply company Tanesco and Algeria’s electricity and gas company Sonelgaz is expected to be operational “within a few months”.

According to APS, Algerian energy minister Youcef Yousfi said two initial joint projects between the countries relating to gas distribution and oil well drilling and production “are now at an advanced stage”.

Algeria and Tanzania signed a memorandum of understanding for cooperation in the energy and mining sector in December 2013. Algeria said cooperation would extend to “the exploration and exploitation of hydrocarbons, mining, electricity” and training.

According to the government-supported Tanzania Investment Centre (TIC), there are currently 22 oil companies involved in exploration activities for oil and gas in the country, “which is becoming a regional hub after a flurry of discoveries”. TIC said the country has more than 41 trillion cubic feet of gas reserves based on latest estimates (54-page / 5 MB PDF).

TIC said: “There are still numerous deep-sea blocks that are yet to be explored. The Tanzania Petroleum Development Corporation is inviting oil and gas companies and other specialised investors to participate in the exploration of hydrocarbons in Tanzania.” Companies will be invited to negotiate production sharing agreements.

TIC said the mining industry accounts for “a significant share” of Tanzania’s export revenues. “The government’s plan is to have this sector contribute 10% of gross domestic product (GDP) by 2025,” TIC said.

A report published by the UN’s Economic Commission for Africa (278-page / 10.4 MB PDF) earlier this year recommended boosting ‘energy trade’ in Eastern Africa, by encouraging private investors to develop the energy infrastructure of individual states to maximise regional economic growth.

The report said discoveries of oil and gas resources in the sub-region, in addition to “growing interest in biofuel development”, can help reduce energy insecurity through regional cooperation. “These and other opportunities constitute the possibility of an energy transformation and revolution in the sub-region,” the report said.