Swala Oil & Gas (Tanzania) plc in its December announcement said it had exercised its option under the Kilosa-Kilombero Joint Operating Agreement to require Tata Petrodyne Limited to withdraw from the JOA and
the Kilosa-Kilombero Production Sharing Agreement .
Folllowing the withdrawal Swala’s Participating Interest increased from 75% to 100%, subject to the 20% back-in rights of the Tanzania Petroleum Development Corporation.
In accordance with the provisions of the JOA and of the Farm-Out Agreement (FOA) Tata Petrodyne Limited remains liable for the costs of transferring its Participating Interest, for its Participating Interest share of the remaining 2019 approved budget and for its remaining obligations under the FOA. Swala said it had issued TPL with a closing invoice of $2.6 million and a Notice of Dispute in accordance with the provisions of the JOA, the first step in the resolution of which is a meeting between senior management.
The Kilosa-Kilombero licence currently remains in Force Majeure since June 2019 due to its inability to drill the Kito prospect after failing to receive the required licenses. Since 2016 Swala and partners have to date acquired 800km of 2D seismic that further delineated the Kito Prospect and identified a number of additional leads and prospects in the Kilombero basin.
The Kito well is the licence’s first planned prospect which when drilled, will target best contingent resources of 147.2 mmbbls net to Swala in the Kito Basal Sandstone and the Kito Sequence 1 Sandstone horizons.
Dr. David Mestres Ridge (Swala CEO) said: “This step is a regrettable one, but one forced upon us by TPL’s failure to comply with its obligations under the JOA. TPL has been a co-venturer in the Kilosa-Kilombero licence since 2015, shortly before the Kito-1 well was originally due to be drilled and has been keen to drill throughout. We are confident that the outstanding matters under the JOA can be addressed promptly and professionally and wish TPL success in its international operations.”