Tanzania seeks up to 85% profit share from oil, gas output

FELIX NJINI

DAR ES SALAAM, Tanzania (Bloomberg) -- Tanzania will seek as much as an 85% share of profit from oil and gas produced in the East African nation, according to a draft law being debated in parliament.

The government proposes taking a 60% to 80% portion of profit from onshore gas production, with the ratio varying depending on quantity, according to the Petroleum Act 2015, distributed Thursday by the Energy Ministry in the commercial capital, Dar es Salaam. The ratio increases to a maximum of 85% for gas produced offshore, while the share of oil profit is set at 50% to 70%, depending on quantity and source of extraction.

Tanzania’s gas reserves total an estimated 55.1 Tcf, making them the second-largest along the East African coast after Mozambique. BG Group Plc, which is being acquired by Royal Dutch Shell Plc, Statoil ASA of Norway and partner Exxon Mobil Corp. all have blocks in Tanzania.

The legislation, which is expected to be passed before parliament is dissolved in July, “will bring a level of certainty in the oil and gas landscape,” said Ahmed Salim, a Dubai-based analyst at Teneo Intelligence. The bill will probably be passed by parliament without a “significant amount of scrutiny” because lawmakers are involved in political campaigns ahead of elections in October, he said by email.

The government also plans to seek royalty payments of 7.5% from offshore oil and gas producers and 12.5% from onshore oil and gas producers, according to the proposed legislation.