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Tanzania: Investment - Tanga Gears Up for Oil Exploration

TANGA Region's economy is soon changing for the better, if a UK company which is currently doing oil exploration strikes that precious liquid this year.

Afren East Africa Exploration which has been conducting studies in the region for the last three years has finally decided to start exploration this month. Authorities in that region believe that for an investor to invest millions of dollars in the project, it means there is 'something', so the local business community should start thinking how to benefit economically once the drilling begins.

"Though the exploration is still in the preliminary stages, the amount of money and resources invested by the company gives high hopes for the discovery of the resources," the region's energy Eng Amaon Kyombo says.

Tanga's former Regional Administrative Secretary (RAS), Mr Benedict Ole Kuyan (recently transferred to Mara Region) says that the region is expecting to thrive in the extractive industry especially given its profile of underground natural resources. He said Afren East Africa Exploration has been doing the study for three years and they intend to set up first exploration block this month.

In such a case, they would either get gas or oil, he says adding that by the time an investor puts 100 million US dollars into an investment, then he/she knows that there is something underground.

"When you see a multinational company like this one is ready to invest such a huge amount of money in exploration, it means there's something somewhere.

Oil and gas exploration activities are on rapid increase in the region," he adds. Afren has a portfolio across the region. It has added its Tanzania side by acquiring a 74 per cent operated working interest in the Tanga Block, located offshore Tanzania, from Petrodel who retained a 26 per cent interest in the block.

Available reports say that in consideration for the acquisition of the interest, Afren has agreed to reimburse Petrodel a percentage of the back costs in relation to the block. Afren has funded all costs associated with the acquisition, processing and interpretation of an agreed seismic survey over the block amounting to 900 km of shallow and deeper water 2D coverage.

The Tanga Block lies northernmost coast, directly south of and adjoining Kenyan blocks L17 and L18 in which Afren holds a 100 per cent interest. The licence includes onshore, shallow marine and deep marine areas.

The block is covered by 200 km of legacy 2D seismic data and 1,200 km of good quality new 2D seismic data covering mainly the deeper water area, which was acquired by Petrodel. Afren documents availed to the 'Daily News' recently say that the Tanga Block is well located as it includes a deep basin with a very thick sedimentary section that has the potential to host several source rock intervals and reservoir/ seal pairings.

"Potential petroleum plays recognised to date are Lower Cretaceous sands deposited in deltaic to shallow marine environments, Upper Cretaceous submarine fans, Eocene shelf sands and Miocene fluvial and deltaic sands," it notes. It also notes that the Tanga block is also a possible source of charge into the southern parts of adjacent Kenya block L18.

"Oil seeps and shows encountered in previous wells drilled on the nearby Pemba Island attest to the oil potential of the block and surrounding area," it says. With the entry of new investor Swala Energy Limited in oil and gas exploration recently in the country, statistics show that a total of 26 licences have been issued being the highest number in the East Africa region.

It is such kind of investments that call for Tanga business community to start thinking how it could benefit in terms of providing services to foreign companies which put such huge stash in places like Tanga.

Tanga City has among the best economic and social infrastructure in the country, and is well connected by road, raillines and telecommunications with large markets in Eastern and Central Africa, a factor that allow business people to provide services to this company when it starts drilling oil.

Tanga city has institutions in medical and livestock research, regional hospital and five companies offering financial services. An airport provides air services to other urban and tourism centres in the country. If used well, these services mat help local people improve their economy by using them to offer services to this company.

The region plans to set up an international market and a fruits processing plant in an effort to add value to a wide range of fruits produced in the region and this could as well provide light beverages to employees of this UK company. Acting Muheza District Executive Director Salehe Kamnge says that the plant is to be built at Segera, at the junction for the Tanga-Mombasa and Dar es Salaam-Arusha highways.

"The proposed market will be a solution to the long-standing people's outcry to have a reliable market for their produce, which has been benefiting the business community than the growers," Kamnge says, declining to go into details about the projected cost of the envisaged market. The official said the idea was reached to give farmers more economic opportunities than were obtaining now.

It is estimated that Tanga Region has more than 840,000 orange trees, which is equivalent to 8,400 hectares, with more than 80 per cent being found in Muheza District. "Our target is to create a sustainable market for orange growers. The current market is not stable and is exploitative... our people get little from this important sector," Kamnge says.

Currently, orange growers in the district rely on Kenyan businesspeople who buy at a very cheap price and take the produce to Mombasa while some is flown to overseas markets. According to the official, several studies on the tropical fruit proved that, if well tended and has a reliable market, the sweet fruit would help to scale down poverty levels in the region.

Orange production has increased dramatically to reach 7,400 hectares which produce over 72,000 tonnes of oranges, giving orange farmers an income of about 3bn/- annually. Tanzania earns about 35 million US dollars from exports of fruits and flowers annually, according to statistics from the Bank of Tanzania.

Kamnge, who is a land, natural resources and environment officer in the district, called on farmers to embark on modern farming practices to increase orange production in the district. "I urge all the people in the district to invest heavily in the sector for more output," he says. During the Tanga investment forum last year, Tanga Regional Commissioner Ms Chiku Galawa said her region has attractive natural resources like gemstones, fish, forestry, gypsum which could fetch good prices if oil is found in Tanga.

She mentioned other products in the list like sisal, cashewnuts, coffee, tea, spices, cassava, maize, bananas, paddy, beans, potatoes, fruits (Citrus) and vegetables, without forgetting cattle. Ms Galawa said that major industries like textiles and sisal products could as well provide services to the firm drilling oil in Tanga.

According to her, light manufacturing like soap detergents, fruit juices, paper products, plastic and chemical products, fertilizer production, construction materials, cement manufacturing, steel manufacturing, food processing can also find good market to areas where oil will be drilled.

The regional commissioner recommends that Afren should be committed to creating shared prosperity with host communities in Tanga located near to operations through local sourcing and community development activities.

Ms Galawa says that community development initiatives should reflect the local development context and operational stage of activities and typically fall into community health care, improved education and skills, access to energy and also strengthening local livelihoods and economic development.

The company should work closely with local and national stakeholders to identify key needs at the community level to propose relevant projects.

According to her, such projects should be vetted against the following criteria: Type and Scale of Impact - What impact will the project have on local communities and how does it fit within the priority themes?

How many people will the project benefit? - Sustainability - Is there demonstrated local ownership over the project and a clear pathway to long term sustainability? - Timeline - Given the uncertainty of exploration activities, do project timelines align with operational timelines to ensure adequate oversight on project delivery and results? - Capacity to execute - Do local development partners have a demonstrated track record to ensure results and to secure support from local communities? - Cost effectiveness - how effective are the proposed activities in generating the target results?

It is such an approach that may guarantee a future to local residents in Tanga Region who have different economic opportunities that are currently underutilized.

Tanzania Daily News

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