So said Tanzanian Minister of Energy and Minerals Daniel Yona when he addressed a Commonwealth Investment Conference in Dar es Salaam on 28th May 2003. He was not the only one who could smell oil.

OIL PROSPECTORS FROM THE NETHERLANDS, BRAZIL, ROMANIA, BRITAIN, IRELAND AND FRANCE CAN ALSO SMELL IT
Company’s specialising in oil prospecting are moving into Tanzania from all over the world.

Managing Director of the Tanzania Petroleum Development Corporation (TPDC) Yona Killagane announced that technical and financial programmes were going on to evaluate the petroleum potential of the areas to be explored. Seismic and hydrocarbon tests had shown that a large area of Tanzania’s coastal belt, the Rufiji river valley and delta, and the western flank of the Great Rift Valley in Rukwa region had potential for oil. The cumulative seismic coverage owned by companies for exploration is approximately 52,000 km -of which 28,000km is offshore and 24,000 km onshore, including the interior rift basins.

BRIGHT PROSPECTS
Mr Killagane said: “Based on the work so far done, the prospects look bright and that is why companies are still signing up for more work.”

On June 9 the East African reported that Shell Exploration of the Netherlands had joined the search for oil and hoped to strike it in five to eight years following negotiations for exploration between Shell and the TPDC). Shell (T) Ltd. Chairman Mike Bowers confirmed that Shell Exploration had won a bid for four deep-sea exploration blocks East of Zanzibar and to prospect four deep-sea areas or ‘blocks’ in the Rufiji delta.

Petrobas of Brazil was reported to be bidding for a block about 24 kms East of Mafia island southeast of Dar es Salaam.

The French company Maurel and Prom was said to be hoping to drill on Mafia island and areas of Mkuranga district on the coastal mainland.

The Anglo-Irish Oil Exploration Company Aminex has signed a deal with Romania’s State-owned Petrom on Tanzanian’s offshore interest. Aminex said its wholly-owned Tanzanian subsidiary, Ndovu Resources, had signed an agreement with Petrom, under which Petrom will pay 50% of all costs of drilling and completing the two wells to earn a 30% working interest in the licence. The total cost of the two-well programme is estimated to be $15 million. The two companies have also reached initial agreement to use Petrom’s Orion type jack­up rig “Atlas” to drill the two wells on Nyuni.

Four months after the Minister’s speech, on October 1, it was announced that the ‘Bounty Oil and Gas Company‘ had commenced drilling at what is known as the Nyuni-1 petroleum exploration well some 30 kms off the coast of Tanzania, about 12 miles from the Songo Songo gas field at Kilwa where gas production should start this year. The Nyuni prospect may hold reserves of up to 260 million barrels of oil. The well is expected to reach oil at 3,000 metres under the sea. One of the many live oil seeps in the region is to be found on Nyuni Island, the small island after which the licence is named, and which also directly overlies the main Nyuni prospect now being drilled.

In time, reported the London Guardian (September 11) the whole western flank of the Rift Valley inland may be drilled, as seismic and hydrocarbon tests have shown that this too has potential for oil.

ECONOMICS OR CONSERVATION?
Giles Foden looked at the ecological implications for the islands of Zanzibar and Mafia in a report he sent to the London Guardian from Mafia island. He wrote: ‘The oil in Tanzania’s coastal belt was discovered in the 1960s but it is only recently, with western governments searching for alternative sources to the Middle East, that these paradise isles are being taken seriously as drilling sites . . . . . . ..With negotiations on Zanzibar bogged down between the island and the mainland over which should benefit (Zanzibar is unhappy with a proposed 60:40 split of profits), Mafia and its tiny neighbour Chole seem likely to see exploration, perhaps within a year. Mafia is about 30 miles (50km) long and 10 miles (17km) wide and is surrounded by a host of tiny islets; it is home to one of the world’s richest marine habitats -a marine reserve run by the Tanzanian government with support from the World Wildlife Fund. As well as fish (more than 400 species) and other marine life, from dolphins to both green and hawksbill turtles, the area is home to many species of birds, including black kites and lilac-breasted rollers. There are also said to be dugongs (sea cows), among the world’s rarest creatures, in these islands ….

Much of the area’s commerce has depended in the past on the monsoon winds that blow variously across the Indian ocean: the north-east monsoon (the kaskazi) from December to March and the south-east monsoon (the kusi) from April to November. It was these winds, filling the sails of dhows, which once made the area rich. Oil may do so again, but at what ecological cost?

Another factor in the mix is that the region is host to two Unesco world heritage sites: Zanzibar’s Stone Town and the ruins of the coastal city of Kilwa on the mainland. Shell said at the end of August that the company would avoid exploring or drilling on sites that carry these designations.

Commerce or conservation? It is not a simple stand-off, not least because oil companies are now much more alert to environmental issues than they used to be. Many sponsor environmental programmes. And as I learnt on my return to Mafia, deep-sea rigs can sometimes be an ecological benefit. I was told that fish collect round structures like rigs; they can act as artificial reefs, which is important when coral is being damaged, as a lack of coral has a massive effect on marine diversity.”

If there is to be a muafaka. or reconciliation between economics and conservation, the ecology of the whole coastline needs to be considered, not just that of the marine park.

EARLIER EXPLORATION
The first offshore exploration well in Tanzania was drilled by BP in the coastal basin in 1954 and encountered oil and gas. Six out of seven wells drilled at that time and over the next few years encountered oil and/or gas shows, two being potentially commercial gas discoveries. However, a lack of appropriate infrastructure, an inhospitable political regime and the ready availability of low cost oil elsewhere left Tanzania on the sidelines of the oil and gas industry ….. .

The dawn of the New Millennium has seen a resurgence of exploration interest along the entire East African margin, for both gas and oil, as fewer attractive opportunities remain available on the West African margin and the industrialised world increasingly seeks to replace its dependence on the Middle East with reserves in less controversial areas. (The demand for oil in China is growing spectacularly; in October 2003 China consumed 11% more than it had done in the same month of 2002 -The Times). Improved geological knowledge is being gained from a re-examination of existing data using up-to-date technology, challenging previously held views on the prospectivity for oil and gas.

Highly successful exploration programmes in countries along the West African coast, not taken seriously by many until quite recently, have led to a reappraisal by geoscientists of the gas and oil exploration potential of Tanzania. ‘

On June 7 Majira alleged that while the Prevention of Corruption Bureau (PCB) had begun investigating the government’s contract with the Malaysian-financed Independent Power Tanzania Ltd (IPTL) (see earlier issues of TA) it had found that four ministers and one MP had been involved in what it called ‘the shady deal’. The paper said that, while the initial negotiations had been going on, one minister had been offered $200,000 which he had turned down. According to the paper the PCB’s investigation had found a ‘hot potato’ when it seemed that some senior ministers might have been implicated. The PCB was said to have left the matter with President Mkapa to deal with. The Parliamentary Sectoral Committee on Trade had earlier urged the government to take legal and disciplinary action against officials who might have been involved.

The government is now paying Shillings 3 billion per month for electricity from IPTL. A CCM MP said that, as TANESCO was not involved in the IPTL, all blame should be borne by the government. He suggested that the IPTL plant should be bought by the government so as to stop the payment of huge amounts of money every month. The leader of the opposition in the National Assembly Dr Kabourou announced that he was also investigating the matter and might be able to name the ministers involved later.

Meanwhile, Minister for Energy and Minerals Daniel Yona said that 127 villages were supplied with electricity last year.