TPDC dismisses claims Tanzania will lose $1billion annually from gas sales

The Tanzania Petroleum development corporation (TPDC) has dismissed a leaked document that shows that the East African country will lose $1 billion annually under a production sharing agreement between TPDC, Statoil and Exxon Mobil.

The PSA hit the news after Kigoma North legislator and former shadow minister Zitto Kabwe posted on twitter what is being termed as a leaked PSA between the government and the exploration companies saying Tanzania stood to lose a lot.

The legislator claims that one of explorers want a domestic market obligation requirement for ten percent of production reserved for the market reduced to nil.

He questions how the seven step model for sharing agreement with government ranging from 50 to 80 percent was changed to a six step model with government share ranging from a low 30 percent to just 50 percent at the highest levels.

However according to TPDC managing director Yona Kilagane under the model PSA with the two companies the government will earn 61 percent of revenues from natural gas with ExxonMobil and Statoil earning the remaining 39 percent.

TPDC board chairman Michael Mwanda also accuses the legislator on relying on the leaked document whilst the actual PSA was available by members of the public.

“As a parliamentarian, Mr Zitto knows laid procedures for obtaining such documents. It is not proper to claim the PSA was leaked and yet in reality it can be obtained by anyone. It is unfortunate that this issue has taken a political dimension where people look at one side of the deal and ignore available data,” Mr Mwanda tis quoted by Daily News.

Mwanda says that existing PSA’s are meant for exploration of oil with an addendum included for natural gas should Tanzania strike natural gas.

“This is due to the fact that if we discover oil today, its production and prices are well known in the world market. However, prices for natural gas depend on how much has been discovered and available infrastructure to transport the resource. In all PSAs worldwide, there are sections (addendum) which spells out how the respective country would benefit from gas that would be discovered.” He adds.

According to the Tanzania Petroleum development corporation Statoil and ExxonMobil have already used one billion dollars in their exploration inside Tanzania.

To date Tanzania has discovered 50.5 trillion cubic feet of gas (Tcf).

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