Petro Factbook 2018

Petro Factbook 2018

Table of Content

About the Tanzania

Petro-factbook Key institutions in the
PG 3 petroleum Industry in
Tanzania PG 8

The Legislative Framework for Natural

Gas Sector in Tanzinia PG13

Glossary of Terms used in

Petroleum sector PG 21
Exploration and Production
Companies PG 15
 Petro Factbook 2018

About the
Tanzania
Petro-factbook

This booklet contains facts about the Tanzania petroleum industry and can be a useful source of information
about the gas extraction and other petroleum related activities. The book gives an overall presentation of the
Energy sector and petroleum in particular at a glance, operating companies and institutions in the petroleum
industry also highlights key legislative frameworks governing the Tanzanian petroleum industry, It further pro-
vides glossary of terms used in petroleum sector in general.

Overview of the “Tanzania as a Future Petrostate program”

Following the huge volumes of natural gas that have been discovered offshore in Tanzania. There are prospects
that the country will become a major hydrocarbon exporting country over the next decade. Thus, there are high
expectations that exploitation of natural resources will substantially increase Tanzania’s national income. Lessons
from other countries show that, on average, resource-abundant countries have experienced lower economic
growth, lower levels of human development, increased inequality and strife in society over the last four decades
than their resource-poor counterparts, a phenomenon that has been labelled the ‘resource curse’ or the ‘paradox
of the plenty’. Avoiding the resource curse will be a major task for the Tanzanian Government. This will require
empirical understanding of key prospects and challenges facing Tanzania as a future petro-state.

Seeing the need, in october 2014, REPOA and Chr. Michelsen Institute (CMI), in close collaboration with the
National Bureau of Statistics (NBS), commenced implementation of a research programme titled “Tanzania as
a future Petro-state: prospects and challenges”. with the aim of enhancing the empirical understanding of key
prospects and challenges facing Tanzania as a new Petro-state, and to provide contextualized and evidence-
based policy analysis in order to contribute to avoiding a resource curse situation. The programme is funded by
the Royal Norwegian Government. Embassy of Tanzania.

Together with this fact booklet the program has published a handful of articles, briefs and papers as seen on the
program’s website: www.tanpetstate.org. A Resource hub, a webpage specifically dedicated to supplying datasets
on petroleum and other related activities in Tanzania for use in analyses of the natural gas sector and its social
and economic effects on Tanzania, as can be seen on: http://data.tanpetstate.org/
 Petro Factbook 2018

Tanzania’s history
with natural resource
production and
extraction
Exploration of oil and gas in Tanzania has taken place since 1952, prospecting for oil in the years 1952-1964.
Exploration and drilling took place along the coast on Mafia Island, Zanzibar, Pemba and Onshore in the
Mandawa Salt Basin, with no significant hydrocarbon finds. In the next phase of exploration non-associated
natural gas was discovered in 1974 from Songo Songo, Kilwa district in Lindi Region.

In 1982 another natural gas discovery was realized in Mnazi Bay – Mtwara Mikindani. Most of the drilling
occurred in the eighties, following the enactment of the Petroleum Act and spurred on by high oil world market
prices in the early 1980s.

In early 2000, rights to explore the coast of Tanzania were granted to several oil and gas companies including
Petrobras, Ophir, Statoil, Dominion and British Gas (now Shell). Significant discoveries of gas were made in blocks
1, 2, 3 and 4. In the years 2010 to 2015 a total of 47.08 Tcf has been discovered in the deep sea where in 2012
Statoil and Exxon Mobil alone made the biggest offshore gas reserve discovery of 20 Tcf at Zafarani field off the
coast of Indian Ocean. Making a total of 57.25 Tcf inclusive of other discoveries of 10.17 Tcf found onshore; in
2007 Mkuranga (0.2 TCF), 2008 Kiliwani (0.07 TCF), 2012 Ntorya ( 0.178TCF) and in 2016 Ruvu (2.17 TCF).

Tanzania Energy sector at a glance

Currently about 80% of Natural gas is used for natural gas from Tanzania to other markets calls for a
power generation amounting to Mega Watts 884.5 Liquefied Natural Gas Project (LNG).
according to 2018 estimates where 50% of power is
consumed by national grid. Gas turbines account for Liquefaction shrinks the volume of the gas to 600 times,
about 54% of total installed capacity connected to allowing for large amounts to be stored or transported
the national grid. Other uses are for Industrial heating over a long distance. The envisioned plant capacity is
where a total of 37 industries have been connected, a standard 5 Million Metric Tonnes per annum (MTPA)
cooking for households so far 72 houses have been LNG train that consumes 833mmScfd of natural
connected and Compressed Natural gas (CNG) for gas. The project is yet to start as Host Government
vehicles with one refilling station now at Ubungo. Agreement (HGA) negotiations are ongoing. In
November 2015, TPDC finalized acquisition of land
Other projects emanating from gas production for the LNG facility planned to be located at Likong’o
include a 542 km Natural Gas Pipeline from Mtwara village in Southern Tanzania town of Lindi in a 2071
and Lindi to Dar es Salaam and Gas Processing Plants hectares of land set aside. Key players in the LNG
at Madimba (Mtwara) and Songo Songo (Lindi) project include TPDC, Royal Dutch Shell/BG Group;
which was completed in 2015. Also plans to export Equinor (Statoil), ExxonMobil and Ophir Energy.
 Petro Factbook 2018

Natural Gas value chain

A natural gas value chain is an integrated process that

can be broken down to upstream, mid-stream and
downstream. First, the Exploration and Production
companies need to explore, drill and extract natural
gas from the ground. Then the transmission companies
Drilling
link the gas fields to major consuming areas either Production
via pipelines or LNG. Finally, the Local Distribution
Companies deliver the natural gas to respective
Upstream
industries and homes.

In Tanzania the upstream is mainly operated in a

joint venture between TPDC, a national oil company
Transportation
that holds the exploration and development license Treatment
together with International Oil Companies (IOCs)
as contractors. The mid-stream and downstream is
mainly operated by GASCO, a subsidiary of TPDC and
Midstream
IOCs. A full list of operating companies and institutions
can be found in section …..
Industrial
Residential
Commercial

Downstream
 Petro Factbook 2018

Gas Processing In Brief

Natural gas used by consumers is composed almost entirely of methane. Raw natural
gas found in the coast of Tanzania comes from gas/condensate wells in which
H there is little or no crude oil, termed ‘non-associated gas’.
H

C Gas wells typically produce raw natural gas by itself, while condensate wells
produce free natural gas along with a semi-liquid hydrocarbon condensate. Raw
H
H natural gas contains water vapor, hydrogen sulfide (H2S), carbon dioxide, helium,
nitrogen, and other compounds.

Natural gas processing consists of separating all of the various hydrocarbons and fluids
from the pure natural gas, to produce what is known as ‘pipeline quality’ dry natural gas fit for
transportation pipelines. Water collected is then used for other purposes at the plant and other bi products
are produced from the condensate.
Currently there are four (4) operating Natural gas processing plants in Tanzania: Songo songo Gas processing
plant, Mnazi bay, TPDC Songo Songo and TPDC madimba

Fuel Mix and Energy Consumption

The power sector in Tanzania has an energy mix of hydro, biomass and thermal power. As of 2017 the composition
stands at hydro 41.54 %, thermal plants (Natural gas power plants 45.0 %), Liquid Fuel 12.69% and Biomass
0.77%. Below is a summary of Electricity Installed capacity and Electricity generated from both National grid
and Isolated stations. Thermal power is a combination of several power plants; Gas fired, Heavy Fuel oil, Biomass
and Industrial diesel. Gas fired electricity was introduced in 2002 via SONGAS power plant Ubungo, electricity
is supplied to the national grid and distributed to end users by TANESCO. Songas’ Thermal Power station is the
largest gas-fired power station in East Africa with installed capacity 189 MW.

Figure 1 Electricity generation in Tanzania

7,092.1

7,009.5
6,457.6

8,000.00
6,119.5
5,938.8
5,700.2

7,000.00
5,153.4
4,816.7
4,645.0

6,000.00
4,214.0

4,232.9
3,612.4

3,447.8

5,000.00

4,000.00

3,000.00

2,000.00

1,000.00

0.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Generated (GWH)
 Petro Factbook 2018

East Africa Crude Oil Pipeline Project (EACOP)

The government of Uganda and Tanzania signed a Memorandum of Understanding (MoU) in October 2015
for the development and constructions of the pipeline. The signing was facilitated by the Tanzania national oil
company and the representative of Lake Albert upstream investor.The Cross-border Pipeline project will cover
1,443 kilometres with 80% distance transiting through Tanzanian land and 20% covering Ugandan land. The
pipeline will transport crude oil from Kabaale Uganda to Chongoleani peninsula near Tanga port in Tanzania for
export to other markets.

Post Front end Engineering design (FEED) the execution of

the project will start with a pipeline company established
operating the pipeline that is jointly owned by the
shareholders of the project that is the two governments and
the private led upstream investors from TOTAL, TULLOW and
CNOOC. The first oil is expected to be transported end of year
2020.


 Petro Factbook 2018

Key
institutions in
the petroleum
Industry in
Tanzania

The institutional framework include the regulatory authorities in Tanzania that are concerned with management
of oil and gas sectors, three state owned companies, two governing bodies, three regulatory authorities and two
other Institutions. State Owned Companies

Tanzania Petroleum Development Corporation (TPDC)

Tanzania Petroleum Development Corporation (TPDC) is the national oil company of Tanzania,
wholly owned by the government. It was established in 1969 under the Public Corporations
Act No. 17 of 1969 and commenced its operations in 1973. The major roles of TPDC
include; exploration and production of petroleum, distribution and storage facilities, hold
exploration and production rights, contract/hold equity or participate in oil concessions,
franchises and licenses, management of parastatals or other legal entities transferred to
the corporation, development of an adequate industrial base for the oil industry.
http://tpdc.co.tz/
 Petro Factbook 2018

Tanzania Electric Supply Company Limited (TANESCO)

TANESCO is a parastatal organization under the Ministry of Energy. The company generates,
transmits, distributes and sells electricity to Tanzania Mainland and sells bulk power to
the Zanzibar Electricity Corporation (ZECO). TANESCO owns most of the electricity
generating, transmitting and distributing facilities in Tanzania Mainland. It is responsible
for all power generation functions owned both National Grid connected and off - Grid
Stations. Other sources of generation are from independent power producers (IPPs) and
emergency power producers (EPPs), which feed the National Grid and isolated areas as
well as Small power projects (SPPs). Thermal contributes the largest share of TANESCO’s
Grid power Generation with 57% of total installed capacity while Hydro Plants contributes
4 3% . TANESCO owns interconnection power grid made up of generation system transmission and
distribution system. It has a marketing Business Unit that deals with distribution of electricity, promotion of
services and all customer service matters. http://www.tanesco.co.tz/index.php

Gas Supply Company (GASCO)

In 2014 TPDC underwent restructuring that divided the company into an upstream and downstream directorate.
With the downstream directorate seeing an establishment of GASCO a commercial company under TPDC which
invests in and market Tanzanian gas. The company handles all operations of natural gas pipelines downstream
operations that include processing and purifying of raw natural gas, and marketing and distribution of products
derived from natural gas; midstream operations that comprise construction of natural gas transportation pipelines.
 Petro Factbook 2018

Key Government
Institutions
Bank of Tanzania (BOT)
BOT is the central bank of the United Republic of Tanzania. BOT has been given mandate to
be the operational manager of the oil and gas fund; revenue holding account which shall
play a role of receiving all revenues from the fund and revenue saving account which
shall be receiving revenues from the revenue holding account thereby avoiding wasteful
expenditure and saving for the future generation.
https://www.bot.go.tz/

Energy and Water Utilities Regulatory Authority (EWURA)

EWURA is an independent, multi-sectoral regulatory authority established
under Section 4 of Chapter 414 of the Laws of Tanzania. Generally, it
is responsible for technical and economic regulation of electricity,
petroleum, natural gas and water sectors in Tanzania pursuant to
Cap 414 and sector legislation. In the petroleum sector, EWURA
is responsible for regulating midstream and downstream natural
gas activities that include processing, transportation, storage and
distribution of natural gas in Mainland Tanzania. The regulated
infrastructures include processing plants, transmission and
distribution pipelines, and storage facilities. Hence, the goavl of
EWURA is to protect the interests of the key stakeholders which
includes; consumers, suppliers and the government.
http://www.ewura.go.tz/
 Petro Factbook 2018

Local Government Authorities

The local government authorities are responsible for collecting
levy from oil and gas companies with offices in their respective
jurisdiction under the mandate of the Local Government
Finance Act of 1982 The local levy is up to 0.3% of the turn
over net of the VAT and excise duty.

Ministry of Energy

Formerly under the Ministry of Energy and Minerals, in 2017

the ministry was split into two independent ministries which
include the Ministry of Energy and the Ministry of Minerals.
The petroleum industry which includes oil and gas activities was
thereby placed under the Ministry of Energy is a facilitator for the energy
sector in the country. The Ministry of Energy is also responsible for supervising all
policy matters relating to the oil and gas fund, formulation and monitoring broad investment
strategies and operational guidelines for the revenue saving account of the fund.
https://www.nishati.go.tz/

Oil and gas Advisory Bureau-President’s Office

It was established under the Office of the President to guide better utilization the natural resources. Oil and gas
Advisory Bureau is responsible for advising the cabinet on investment policies, strategies as well as laws and
regulations that govern the oil and gas industry in the country.
Petroleum Upstream Regulatory Authority (PURA)

Petroleum Upstream Regulatory Authority (PURA)

PURA was established under the petroleum act of 2015. The major responsibilities of PURA include; regulating
and monitoring the upstream activities in Tanzania mainland, identifying of resource base and enhancement of
resource value, conduct auditing of cost recovery on exploration, development, production and sale of oil and gas
to determine government profit share and royalty.
 Petro Factbook 2018

Tanzania Extractive Industry Transparency Initiative (TEITI)

Tanzania became a member of Extractive Industry Transparency Initiative (EITI) on February 2009 with
representatives from the government, companies and civil society organizations. The main objective of TEITI
is to manage the implementation of EITI in the country. TEITI ensures that disclosure and reconciliation of
payments and revenues from oil and gas companies to the government are conducted in transparent and
accountable manner. http://www.teiti.or.tz/

Tanzania Revenue Authority (TRA)

TRA is a government agency established in 1996 with the general goal of assessing, collecting and administering
tax revenues. In the petroleum industry, TRA has been given mandate by section 6 of the Oil and Gas Revenue
Management Act of 2015 to assess, collect and account taxes and levies derived from oil and gas revenues
which include corporate income tax, skills development levy, Value Added Tax (VAT) and import duty.
https://www.tra.go.tz/
 Petro Factbook 2018

The Legislative
Framework
for Natural
Gas Sector in
Tanzania

There are several policies and laws which govern the natural gas sector in Tanzania as follows:-

The National Energy The policy is a result of merging several policies such as: The Petroleum
Policy, 2015 Policy, the Local Content Policy, the Subsidy Policy, the Natural Gas
Policy, the Renewable Energy Policy, the Bio-energy Policy and the
Revised 2003 National Energy Policy to simplify its administrations.
A Draft National Energy Policy 2015 Implementation Strategy has
been developed. and expected to be in use at…….

The National This policy aims to ensure promotion, attraction and facilitation of foreign
Investment Policy investments in Tanzania through the Tanzania Investment Centre which
1996 was initiated in 1996. Some of the key activities regarding the policy
includes; Heightening of the transparent legal framework that enables
the advancement and guard of all investments and deregulation of the
investment consent process.

The Oil and The OGRMA sets out the legal framework in relation to the managing
Gas Revenue the oil and gas revenues derived from exploitation, development, and
Management Act production of oil and gas accomplishments
(OGRMA) of 2015
 Petro Factbook 2018

The Tanzania Extractive The TEIA asserts the government’s effort to warrant that there are
Industries (Transparency transparency and accountability in the extractive industry.
and Accountability) Act
(TEIA) of 2015

Health and environment The exploitation, extraction and transportation of oil and gas
protection related policies resources are pertinent to the Environmental Management Act
and laws (EMA) 2004, Occupational Health and Safety Act (OHSA) 2003,
Insurance Act 2009, and Fire and Rescue Force Act 2007.

The Petroleum (Local Provides the ways of how effectively the government can meet the
Content) aim of maximizing the country’s benefits from potential and current
Regulations 2017 gas projects.

The Petroleum Act of The Act delivers the legal framework under which the petroleum and
2015 gas will be used for sustainable development.

Natural gas pricing The natural pricing gas regulations rule pricing of the natural gas for
regulations of 2016 the domestic market and cross-border markets.

Natural wealth and The Act stands where necessary, requires all agreement(s) on natural
Resources contracts wealth and natural resources to be tabled for review by the National
(Review and Assembly for purposes of ensuring that any unconscionable terms
re-negotiation of therein are rectified.
Unconscionable Terms
Act 2017

The written laws Amends written laws specified in various Parts of this Act affecting
(miscellaneous the Petroleum Act, THE INCOME TAX ACT, tax administration Act,
amendments) act, 2017 Value added tax and other various laws

The natural wealth and The Act stands to provide for ownership and control over natural
resources wealth and resources and provide protection of permanent
(Permanent sovereignty) sovereignty over natural wealth and resources.
Act 2017
 Petro Factbook 2018

Exploration
and Production
Companies

Alfren Tanzania;
Alfren is an independent oil and gas company which entered Tanzania in
2011 after purchasing 74% working interest in the Tanga Block and later
wholly owned by the Petrodel Resource that now retains 26 % interest in
the company.
http://wiki.openoil.net/Afren_in_Tanzania

Dodsal Hydrocarbons and Power (Tanzania) Pvt. Ltd;

Dodsal Hydrocarbons and Power (Tanzania) Pvt. Ltd is a wholly owned

subsidiary of Dodsal Resources. The company came into operation in
Tanzania after signing the Production Sharing Agreement (PSA) with the
Government of Tanzania in 2007. The company acquired possession of
an on-shore Oil and Gas exploration for Ruvu block with an area of more
than 15,000 sq. km towards the eastern part of Tanzania.
https://dodsal.com/mining/projects.shtml

Dominion Oil and Gas Limited;

Dominion Oil and Gas Limited entered Tanzania in 2016. It is 100%

subsidiary of Dominian Petroleum Limited. However, Dominian Oil and
Gas Limited holds four licenses and three PSAs in onshore Tanzania which
include; Mandawa, Kisangire, and Selous Deep sea.
http://wiki.openoil.net/Dominion_Petroleum_in_Tanzania
 Petro Factbook 2018

Equinor;
Formerly known as Statoil. It is a Norwegian national oil company which
commenced its operation in Tanzania in 2007. Equinor came into operations
after signing a PSA for offshore Block 2 of water depth between 400-3000
meters with TPDC whereby it operates with 65% working interest, partnered
with US major ExxonMobil with 35% working interest. Statoil is working in
progress towards the construction of an onshore LNG plant in joint venture
https://www.equinor.com/en/where-we-are/tanzania.html

ExxonMobil Exploration and Production Tanzania Limited

(EMEPTL);
EMEPTL came into operation in Tanzania in 2010. It is a fully owned subsidiary
of US major ExxonMobil; in which it holds 35% working interest in Block 2
Deep water prospect offshore southern Tanzania partnered with Statoil with
65% working interest. Recently, EMEPTL and its partner have completed
four natural gas discoveries with estimated reserves of 17-20 TCF found in
water depth of 2500 meters. https://corporate.exxonmobil.com/en/company/
worldwide-operations/locations/tanzania

Heritage Rukwa Tanzania Limited;

Heritage Rukwa Tanzania Limited is an oil and gas company which entered
Tanzania in 2008 and successfully completed 3D seismic acquisition in offshore
Tanzania. It has been licensed for exploration in the entire Rukwa Rift basin
which has been split into two separate areas which include; Rukwa North Basin
and Rukwa South Basin. http://www.heritageoilltd.com/our-operations.aspx
 Petro Factbook 2018

Jacka Resources Limited;

Jacka Resources Limited is an Australia-based oil and gas exploration company
which entered Tanzania in 2011 after signing a PSA with TPDC for Ruhuhu Block, an
onshore area located in southwest Tanzania and covers an area of approximately
10,343 square kilometers.
http://www.jackaresources.com.au/documents/Jacka%20Resources%20
-20Proactive%20Investors.pdf

Maurel & Promo;

Maurel & Prom is a French exploration company established in Tanzania in July
2004. The company holds Bigwa-Rufiji-Mafia permit with 60% working interest. In
2009, it strengthened its position with the acquisition from Artumas of the Mnazi
Bay permit, in which its operated interest is 48.06%. Maurel & Prom has today
opened the first two wells of the Mnazi Bay gas field that will deliver the Madimba
processing centre (operated by GASCO), the entry point of the gas pipeline linking
Mtwara to Dar es Salaam. The Mnazi Bay permit is governed by a production
sharing contract dating from May 2004. The development licence was granted
on October 2006 for a 25-year term, renewable once for a further period of 20
years. https://www.maureletprom.fr/en/documents/download/193/tanzanie-debut-
de-l-approvisionnement-en-gaz-du-ce

Motherland homes;
Commenced its operations in January 2012 after signing a PSA with TPDC for
Malagarasi Basin.
 Petro Factbook 2018

Ndovu resources (Aminex);

Ndovu resources is a wholly owned subsidiary of Aminex operating in Tanzania since 2001.
Ndovu Resources operates 3 licenses in the country namely; Kiliwani North Development
license (65% WI), Ruvuma Exploration License (75% WI), and Nyuni Exploration License
(70% WI). Four exploration wells have been drilled, two of which encountered commercial
quantities of natural gas. Kiliwani North-1 tested gas at 40 million cubic feet/day and
its being developed for commercial production. However, Aminex partnered with Solo Oil
started production at the Kiliwani north onshore gas field in 2016. http://aminex-plc.com/

Ophir energy;
Ophir Energy is an independent upstream oil and gas exploration company which came
into operation in Tanzania in 2005 after signing a PSA for block 1 with 100 percent working
interest and later signed for blocks 3 and 4 in 2006. Drilling began in 2010 and since then
16 wells have been drilled . Of the 16 wells drilled, 11 have been successful exploration wells
and five have been appraisals. It has so far discovered around 15TCF total gross resource.
https://www.ophir-energy.com/our-assets/tanzania/

Orca exploration Group;

Orca Exploration is an international public company which deals with hydrocarbon
exploration, development and supply of natural gas in Tanzania. The company entered
Tanzania in 2004 when it signed a Production Sharing Agreement (PSA) with the Tanzania
Petroleum Development Corporation (TDPC) for operating 879 Bcf of Songo Songo natural
gas field. http://www.orcaexploration.com/
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Pan African Energy Tanzania (PAET);

PAET commenced its operation in Tanzania in 1991. PAET owns and operates the Orca
Group’s natural gas exploration, development and supply business in Tanzania and holds
the rights to explore, develop market, produce and sell natural gas from Songo Songo Block
in partnership with TPDC. It also has contracts to supply natural gas for power generation
at the Ubungo Power Plant and for industrial uses as well as CNG for domestic use. http://
panafricanenergy.com/

Petrobas Tanzania limited;

Petrobas Tanzania Limited came into operation in Tanzania since 2013. The company is
the operator of Block 5 and 6 in deep water Tanzania partnered with Royal Dutch Shell.

Petrodel Resources Limited;

Petrodel Resources Limited is an oil and gas company concerned with the exploration and
production of oil resources. It entered Tanzania in 2006 when it was awarded exploration
license for the Tanga block after winning a public tender from TPDC.

Royal Dutch Shell;

Formerly known as BG Group came into operations in Tanzania in 2010. Currently, it is the
operator of offshore Blocks 1and 4 in which it holds 60% working interest. Royal Dutch
Shell was also the operator of offshore block 3 until October 2014 where it withdrew due
to insufficient resources to carry on with the exploration investment. The company is in
progress of towards developing a joint liquefied natural gas (LNG) plant in collaboration
with the Block 2 partners. https://www.shell.co.tz/
 Petro Factbook 2018

Solo oil plc

Solo oil PLC Is an oil and gas company which entered Tanzania in 2013. It is partnered
with Aminex. It possesses a PSA agreement for Ruvuma basin composed of two licenses
which include Lindi and Mtwara and covers an area of over 6000 sq. km which is partially
offshore and largely onshore. http://www.solooil.co.uk/our-portfolio.aspx

Songas Limited;
Songas Limited came into operations in Tanzania in July 2004. The company generates
electricity using gas from Songo Songo Islands gas fields off the coast of Southern Tanzania.
Songas Limited conducts gas processing, transportation and power generation from Songo
Songo Gas pipeline. http://www.songas.com/

Swala Energy;
Swala is Australian Oil and Gas Exploration Company established in Tanzania in 2011
to undertake exploration of hydrocarbon although no oil has been discovered to date
in Tanzania. Swala holds a particular working interest along the East African rift valley
system with exploration license for the Kilosa Kilombero basin and Pangani Basin. http://
swalaoilandgas.com/

Wentworth resources;
Wentworth Resources is an independent upstream and midstream oil and gas company.
Wentworth resources came into operation in Tanzania in 2004 after signing a PSA for Mnazi
Bay Concession with 80% working interest partnered with Anadarko and the Mozambique
national oil company. Later in 2005, Wentworth Resources bid for and won concession
in three Ruvuma Basin Blocks of southern Tanzania. The Company and its concession
partners are exploring over 3,250 square kilometers of onshore and near shore acreage
and own two producing natural gas fields in Tanzania which commenced delivering gas to
a new government owned and operated transnational gas pipeline in August 2015. https://
www.wentworthresources.com/tanzania.php
 Petro Factbook 2018

Glossary of
Terms used
in Petroleum
sector

Some of the mostly used terms in the sector and their meanings:

Absorptive capacity;

The ability of the government or the economy to transform (i.e., “absorb”)

additional money (e.g., revenues, investments) into tangible goods and services
without causing inflation or wasteful spending. It depends on availability of
skilled workers and suppliers in the economy, as well as government competency.

Accountability:
The acknowledgement and assumption of responsibility by public, private
and voluntary sector officials for their actions and the existence of redress
mechanisms when duties and commitments are not met.

Associated gas:
The natural gas that can be found in contact and/or dissolved in the crude oil of
the reservoir bed. This can be classified as free gas or dissolved gas.

Allocation of rights:
The process and approach through which companies are granted the right to
extract. Openness and competition in the allocation of rights can have a positive
impact on the quality of the outcome.

Asset allocation:
The distribution of investment across different asset classes in an investment
portfolio. Asset classes, namely: cash, fixed income assets (e.g., bonds), equities
(e.g., corporate stocks) and alternative assets (e.g., real estate; derivatives) have
different risk-return and liquidity profiles which a portfolio seeks to balance
according to the investor’s risk appetite.
 Petro Factbook 2018

Back-loaded revenues:
Revenues that are collected toward the end of the project cycle (i.e., once
production has started and some costs have been recouped by the investor), such
as profit taxes.

Barrel of oil equivalent (boe):

It is the gas volume (or other energy resource) expressed in barrels of crude oil
at 60oF, and which are equivalent to the same amount of energy (energetic
equivalence) obtained from the crude oil. This term is frequently used to compare
natural gas in units of crude oil volume in order to provide a common measure for
different gas energy qualities.

Benchmark price;
A reference price for a commodity based on an aggregation of trading activity over
a given period as published by strategic global or regional commodity exchanges
or other reputable industry sources.

Beneficial owner;
A beneficial owner is a natural person who, directly or indirectly, exercises
substantial control over a legal entity or has a substantial economic interest in, or
receives substantial economic benefit from, such legal entity.

Bonus;
A lump sum payment required by governments at a specified point in the extractive
project timeline, such as at contract signature (i.e., “signature bonus”) or at the
start of production or given production thresholds (i.e., a “production bonus”).

Cadaster (cadastre);
A registry (at national or subnational level) that records property details such
as ownership, location and access rights. Mining cadasters record information
regarding mineral rights such as licenses or concessions. In some countries the
term mining cadaster refers not just to the registry, but also the public institution
managing the registry and mining rights generally.

Capital expenditure (capex);

Refers to money invested in a fixed asset (e.g., building or machinery) that will
create future benefits extending beyond the tax year. Its counterpart is operating
expenditure or running cost. Also known as “capex” in accounting practice.

Capital inflow;
The movement of money into a country for the purchase of local capital assets,
such as buildings, land, machines, government bonds, stocks or companies.

Cash transfer;
In the extractives context, governments may choose to designate a portion of
windfall revenues to directly distribute to their citizens in order to give them a
direct stake in the sector, alleviate poverty and/or to build a tax base. Also known
as direct distribution.
 Petro Factbook 2018

Commercial discovery;
A discovery of extractives that is 90 percent or more likely to be profitable for the
company.

Concession area:
Designated geographic areas over which resource exploration and/or extraction
rights are granted. Also known as blocks or license areas.

Contingent resources:
Resources that are discovered, but are not yet recoverable commercially.

Corporate social responsibility (CSR);

A voluntary self-regulation pertaining to how a company manages its impact on
the community and society at large. It can range from building village health clinics
to publishing information of public interest.

Cost oil:
In a production sharing contract, the amount of oil that the company recovers
before calculating the production share between the state and company. It is
determined by the operating and capital expenditure of the project.

Cost recovery:
The process of recouping costs of producing a commodity, usually established in
the fiscal regime.
 Petro Factbook 2018

Counter-cyclical fiscal policy:

A policy that increases budget spending when resource revenues are low and imposes
limitations on spending when revenues are booming. Resource rich countries can
use this approach to mitigate the volatile impact of commodity boom and bust
cycles on their budgets.

Creaming curve;
A typical pattern of discoveries or for an oil area (often a plotted line on a diagram)
that starts with no finds, quickly rises after the initial discoveries and then levels off
during the maturing phases, when remaining prospects will be smaller and have a
lower discovery probability.

Decision chain;
A model of the interrelated policies made by a government in managing resource
extraction from exploration and licensing to investing revenues. It is used as a
conceptual framework to the Natural Resource Charter, the Extractive Industries (EI)
Source Book and other references for understanding natural resource governance.

Dry gas:
Condensable-hydrocarbon-free natural gas (basically methane).

Dutch disease;
The phenomenon by which, in resource-rich countries, increases in oil, gas and
mineral exports to foreign markets can generate large capital inflow, resulting in
real exchange rate appreciation and inflation. This can hurt certain parts of the
economy such as manufacturing and make exports less competitive.
 Petro Factbook 2018

Earmarking:
Designating a revenue stream or portion of the budget for a particular spending purpose.

Economic diversification:
The process of producing goods and services in different sectors (e.g., agriculture,
manufacturing, services, natural resources) so that no single sector dominates the economy.

Economic efficiency:
A state that is reached when resources are optimally used and distributed in the economy,
minimizing waste and maximizing potential gains.

Enclave development:
The development of extraction related infrastructure in a manner that exclusively suits
the needs of one company and does not take into account other uses by the neighboring
community, host government or other companies operating in the country.

Exhaustibility:
The finite or non-renewable nature of a resource; its ability to be depleted or used up.

Expropriation:
The act by which the government takes over the ownership of an asset (such as an oil
project) against the contract terms governing the asset. This is often done through a
process called “eminent domain.”

Extra-budgetary fund:
The government account or institution that collects specific revenue streams or earmarks
spending.
 Petro Factbook 2018

Extractive resource:
A non-renewable natural resource found in or under the ground; specifically, oil, gas
and minerals.

First come, first served:

A method of license allocation in which the first individual or company that applies
for mineral rights will be given priority to the license or lease.

Fiscal decentralization:
The transfer of fiscal authority from central government to subnational governments.

Fiscal deconcentration:
The delegation of certain fiscal authorities to the subnational level while maintaining
accountability to the central government.

Fiscal instruments:
Policy tools that enable governments to generate revenues from a sector; in the
extractive sector, these will typically include bonuses, taxes, royalties, dividends, etc.

Fiscal policy:
A set of decisions a government makes on revenue (e.g., taxation, savings, borrowing)
and expenditure (e.g., budget spending, debt payments) to influence economic
outcomes (e.g., employment, household spending, prices).

Fiscal regime:
The set of terms and instruments (e.g., taxes, royalties, dividends) that determine
together how the revenues from extractive projects are shared between the state
and companies.
 Petro Factbook 2018

Fiscal rule:
A multi-year constraint on overall government finances defined by a numerical target; for
example, limiting public expenditure growth to three percent per year.

Fiscal stability/stabilization;
The policy of mitigating the impact of volatile resource revenues on the government
budget by, e.g. saving windfall revenues in a fund, paying down public debt when revenues
are high, drawing down on public savings or borrowing when revenues are low, thereby
smoothing year-to-year spending. See also counter-cyclical fiscal policy.

Fiscal sterilization:
Mitigating the negative effects of large revenue inflows on the economy (e.g., exchange
rate appreciation, inflation) by investing revenues in foreign assets; often used to help
mitigate the negative effects of “Dutch disease.”

Fiscal surplus:
The amount by which government revenues exceed expenditures.

Fiscal sustainability:
The ability of the government to maintain its current spending and tax policy over the
long term without threatening solvency or risking default; it is especially important in
regions dependent on finite resource revenues.

Formation gas:
Associated or non-associated formation gas. Gas that comes from reservoir beds.

Formula pricing
A method of linking the price of a commodity to a benchmark price in a sales contract (e.g.,
“Brent minus USD 7.15”).

Free, prior and informed consent (FPIC):

The principle that communities (often indigenous communities) have the right to give or
withhold their consent to proposed projects that might affect the lands they own, occupy,
or otherwise use. It also often encompasses a process of consultation necessary for
obtaining valid consent

Front-loaded revenues:
Revenues that are received toward the beginning of the project such as bonuses.

Fuel subsidies:
An economic benefit provided by the government to reduce the price of fuel. Subsidies
can either be provided directly to consumers or to producers and can be explicit (e.g., a set
price at the pump) or implicit (e.g., selling oil cheaply to refineries).

Gas of injection:
Gas (nitrogen, carbon dioxide, dry gas, etc.) which is injected to the reservoir bed to keep
the pressure, it is used as the secondary recovery system.
 Petro Factbook 2018

Gasification:
Process through which gaseous fuel is produced from solid or liquid fuels.

Gold plating:
When companies spend more than necessary on production costs, often to reduce tax
liability or production sharing burden.

Governance:
The form of political regime or the manner by which authority is exercised in the
management of a country’s social or economic resources for the public good. Can also
refer to the capacity of governments to design, formulate, and implement policies and
discharge functions.

Greenfield exploration:
In oil, gas and mineral exploration, it indicates activities in a new field where deposits are
not already known to exist.

Hedging:
In extractives, the practice of insuring against the risk of price volatility using an options
or futures contract to secure the value of production in advance.

Heaviness (of oil);

Crude oil is classified as light, medium, or heavy according to its measured American
Petroleum Institute (API) gravity or density as compared to water. Any liquid petroleum
with an API gravity less than 20 percent is heavy.

In-kind payment;
Payments made to a government in the form of goods instead of cash. In extractives, it is
a payment using the commodity itself as currency in lieu of a share of financial revenues.

Integrated companies:
Companies that are involved in not only upstream activities but in midstream transportation
and downstream value-added activities such as refinement, trading and retail.

Intergenerational equity:
The principle that future generations ought to have the means to achieve a quality of life
equal to or better than the current generation, for instance from the returns on resource
extraction.

Licensing round:
A period in which the government offers and allocates licenses.

Lift Gas:
Gas injected to the well production piping through special valves to decrease the hydraulic
column density in the piping.
Petro Factbook 2018
 Petro Factbook 2018

Liquefied petroleum gas (LGP):

Gas resulting from the mixture of propane and butane. It is obtained during the separation
of liquids from the gas or during the separation of refinery liquids. Lighter fraction of crude
oil for domestic use and carbureting.

Local content:
Non-tax benefits to the national economy and communities through the use or development,
by extractive sector operators, of domestic labor, suppliers, goods and services, capital and
infrastructure.

London Metals Exchange (LME):

Center for industrial metals trading and price-risk management. LME prices are often used
as global commodity benchmarks.

Mandatory disclosure requirements:

Requirements for companies operating within a certain jurisdiction or listed on certain
stock exchanges to disclose information on payments made to government entities in the
countries where extraction takes place.

Materiality:
The quality of being deemed relevant for reporting purposes. In the EITI process, multi-
stakeholder groups (MSGs) come to an agreement about the level of materiality for
payments and other information to be disclosed.

Model contract:
A document outlining generic terms for possible extraction agreements within a country.
The level of detail and deference given to a model contract varies from country to country.

Monetary policy:
The actions of a central bank, currency board or other regulatory committee that determine
the size and rate of growth of the money supply, which in turn affects interest rates.

Multi-stakeholder group (MSG);

Group that includes representatives from government, civil society and extractive
corporations. In the EITI context, the MSG has the responsibility and authority to govern
the EITI process.

Natural gas:
It is a mixture of light paraffinic hydrocarbons with methane as its main component with
small amounts of ethane and propane; with variable proportions of non-organic, nitrogen,
carbon dioxide and sulfhydric acid. The natural gas can be associated with crude oil or it
can be found independently in non-associated gas or dry gas wells.

Natural gas liquids: (NGL):

Liquids obtained in gas/liquid dividers of field facilities; in the handling, transportation
and compression of natural gas; and at gas processing plants by means of dividers. They
are mainly constituted by ethane and heavier hydrocarbons, they are classified in sour
condensates due to their content of sulfhydric acid and mercaptans, sweet condensates
because they do not contain sulfur compounds, and stripped condensates when all light
gases and CO2 have been extracted.
 Petro Factbook 2018

Natural resource funds (NRFs);

Sovereign wealth funds that are financed primarily from oil, gas or mineral revenues.

Natural resource revenues;

Money received by the government from the extraction or sale of natural resources.

Non-associated gas:
Natural gas found in reserves that do not contain crude oil.

Non-fiscal benefits;
Benefits a government or community might get from an extraction project that are not related to collection
of monetary rents. This can include jobs, infrastructure and other contributions to the local economy.

Off-budget spending;
Government spending that is not managed through the normal budget process and therefore, may
not be subject to the same high standards such as parliamentary oversight, or procurement and audit
requirements.

OPEC: Organization of Petroleum Exporting Countries;

International organization in charge of coordinating petroleum-related policies prepared by its members.
The OPEC, which was founded in 1960, is constituted by 12 countries: Algeria, Indonesia, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. The headquarters of the OPEC
are located in Vienna (Austria). Its supreme authority is the Conference, composed by highly representatives
of the government members, who met at least twice a year to define the political guidelines to continue
with respect to petroleum exports. The Committee of Governors applies the resolutions of the Conference
and administers the organization.
 Petro Factbook 2018

Operating expenditure (opex):

Ongoing expenses that a business incurs for performing its normal business operations (e.g., wages,
maintenance and repair of machinery, utilities and rent). Also referred to as “opex” in accounting
practice.

Petro-aggression;
A theory extending “resource curse” arguments into the realm of foreign policy and implying that
oil changes incentives for states to make war and conduct international relations.

Production sharing:
The allocation of the physical production of oil and gas between the private investor and the state
often by formula.

Production sharing contract/Agreement (PSC/PSA);

An agreement in which the oil and/or gas recovered is shared between the government and a
private company, after deduction of investment and production costs (in lieu of, or in addition to,
cash payments of taxes). It is also called production sharing agreement (PSA).

Profit oil:
In a production sharing contract, the amount of oil that remains after costs are deducted. (See cost
oil.) This is split among project investors, including where applicable government entities.

Project life cycle:

The successive stages of an extraction project; usually moving from exploration, development, and
production to closure. It can last between five and 200 years depending on the size and geology
of the project.

Public disclosure:
Act of making information or data widely available, for example through the media, a public forum
or on a website.

Quasi-fiscal expenditures:
Expenditures by a government entity outside of the ministry or government entity’s main purpose.
For example, national oil company spending on schools instead of their core business, usually
acting on behalf of government.

Resource rent:
Revenues that accrue from a natural resource extraction project above and beyond the total costs
and economic returns.

Reserves:
The subset of total resources that is commercially viable to extract.

Reservoir Rock:
Highly permeable sedimentary rock (limestone, sand or shale) through which petroleum may
migrate, and given their structural and stratigraphic characteristics it forms a trap that is surrounded
by a seal layer that will avoid that the hydrocarbons escape.
 Petro Factbook 2018

Resource curse;
The paradox that countries with an abundance of natural resources, specifically
nonrenewable resources like minerals and fuels, tend to have less economic growth and
worse development outcomes than countries with fewer natural resources.

Resource-dependent:
Generally, when more than 25 percent of a country’s GDP, fiscal revenue or exports come
from oil, gas or mining.

Resource governance:
The manner in which power is exercised and policies are made in the management of a
country’s oil, gas and mineral resources for development.

Resource rent tax;

A fiscal instrument designed to capture part or all of the economic rent from natural
resource extraction. It can take the form of a variable profit tax, a production share
based on the ratio between total cumulated revenues and total cumulated costs, or a tax
triggered by a given internal rate of return of a project. Common variants include windfall
profits tax or super profits tax.

Resource revenue transfers;

Revenues from extractive projects which are collected by the national government and
shared with subnational authorities.
 Petro Factbook 2018

Revenue distribution;
How a government allocates natural resource revenues to different levels of government,
institutions, or directly to citizens.

Ring-fencing;
The separate taxation of activities on a project-by-project basis which enables the government
to collect tax revenue on a project each year that it earns a profit. Without such requirements
companies can offset the tax obligations of more profitable projects with the sizable losses
incurred by a project still in its early stages.

Risk/return profile:
The relationship between the potential profits from an extraction project against the potential
risks

Royalties:
Payment due to the resource owner based on either ad valorem, a percentage of the value of
the resource extracted (e.g., four percent on the sale value of gold extracted) or on a per unit
of extraction basis (e.g. four percent on each ounce of gold produced).

Savings fund:
A type of sovereign wealth fund that saves revenues for the long term.

Shell companies:
A legal entity that serves as a vehicle for business transactions without itself having any
significant operations.

Social license to operate;

Concept expressing the ongoing acceptance of the project by the surrounding community.

Sour gas:
Natural gas that contains hydrocarbons, Sulphuric acid and carbon dioxide (these last two
elements in concentrations greater than 50 ppm).

Source Rock:
Sedimentary rock formed by very fine grain and with an abundant content of organic carbon
which is deposited under reducing and low-energy conditions

Sovereign wealth fund (SWF);

State-owned entity with macroeconomic objectives that invests at least partly in foreign
financial assets.

Spot price;
The rate quoted for immediate settlement on a contract to purchase or sell a commodity. It is
based on the value of an asset on the “spot date”, which is normally two business days after
the trade date.
 Petro Factbook 2018

Stabilization clauses:
Terms of contracts that determine how the contract interacts with other laws in the country. They often limit the
potential for changes in laws to influence the terms of the contract for a period of time or in a particular area (e.g.,
changes in the fiscal regime).

Stabilization fund:
A type of sovereign wealth fund created to mitigate the impact of volatility by collecting deposits when prices are
high and supplementing the budget when prices are low.

State equity participation:

A state’s ownership stake in mineral or oil and gas ventures, either as the sole commercial entity or in partnership
with private companies. The government’s stake can be in the form of paid equity (where the state pays a market
rate for its shares and may have to meet cash calls for project development expenses); carried equity (where the
private-sector partner finances part of project costs upfront and the government pays for its equity via foregone
revenues); or free equity (where the government pays nothing for its equity, but makes trade-offs elsewhere in
the fiscal package).

State-owned company (SOC)/state-owned enterprise (SOE):

A company that is either wholly or partially owned by the government which is created to undertake commercial
activities on its behalf. Also known as a state-owned company (SOC), or national oil company (NOC) in the oil
sector.

Strategic impact assessment (SIA):

A methodology for a government to evaluate the overall benefits and costs for the country of licensing areas. This
is sometimes known as strategic environmental assessment (SEA).

Subnational authority
Official authority or representative of government at a level lower than national (e.g., state, provincial, district).

Surface rental payments:

Payments to the central, or sometimes subnational, government in exchange for the company’s use of land to
carry out exploration or extraction. These payments are typically based on a fixed or per-acre fee, proportional to
the surface area of a mining/ hydrocarbon title.

Sweet gas:
It is the natural gas that contains hydrocarbons and low amounts of sulfhydric acid and carbon dioxide.

Sweetness (of oil):

A measure of the amount of sulfur in oil (less sulfur is sweeter and more valuable).
 Petro Factbook 2018

Tailings:
Material, (e.g. unrecoverable and uneconomic metals, minerals, chemicals, organics and process
water) left over after the extraction of ore.

Thin capitalization:
Refers to the state in which a company is financed through a relatively high level of debt compared
to equity which is often done to reduce tax liability.

Transfer pricing:
The process for setting the price of a transaction between two entities that are part of a group of
related companies. The manipulation of these closed transactions (“transfer mispricing”) to avoid
taxation can result in significant losses to government revenue in resource producing countries.

Volatility:
In the extractive context, this refers to the frequent tendency of oil, gas and mineral prices to fluctuate
unpredictably and dramatically. The Natural Resource Governance Institute, an independent, non-
profit organization, helps people to realize the benefits of their countries’ oil, gas and mineral wealth
through applied research, and innovative approaches to capacity development, technical advice and
advocacy.

Wet gas:
It is the natural gas that contains more than 3 gal/Mpc of liquid hydrocarbons

Wildcatting;
An American term for speculative drilling in areas not known as likely to have resources.
 Petro Factbook 2018

“The Tanzania Petrostate Programme is a joint programme of three institutions: REPOA and the
NBS in Tanzania, and CMI in Norway with support from the Royal Norwegian Embassy in Dar
es Salaam. The Petrostate Programme runs a website at http://www.tanpetstate.org/ where the par-
ticipating institutions and researchers are presented and the aims of the programme, research
results and publications are posted. The programme is also gradually building up a Resource Hub
(http://data.tanpetstate.org/) where researchers and other users can download important statistics and
information pertaining to the Petro sector and its effect on the Tanzanian economy and society.
The database covers 20 categories including production and sales of petroleum products, envi-
ronmental issues, poverty, public budgets.”z