A London-headquartered company, Ophir Energy, is on the verge of striking oil in southern Tanzania after signing a $50 million contract for the first ever deepwater drilling project in the country.
The company will in August this year deploy a specially-built offshore rig to start drilling for oil in the country.
Norway's Odfjell Drilling said its rig "Deepsea Stavanger" had been given a contract by the Africa-focused oil and gas explorer, Ophir Energy, to drill the first deepwater wells in offshore Tanzania.
The contract is scheduled to commence within the next two months and the duration provides for drilling of two firm wells with provisions for a third in the first such campaign offshore Tanzania, privately-held drilling rig firm Odfjell Drilling said.
"We estimate the contract at 100 days. The rate level is around $450.000 per day," Odjell Drilling's managing director Ketil Lenning told Reuters.
"Deepsea Stavanger" will be delivered next month from South Korea's Daewoo Shipbuilding & Marine Engineering.
Ophir Energy, which has operational offices in Mtwara, is hiring the rig on behalf of the blocks 1, 3 and 4 joint ventures where the company partners with BG Group.
Deepsea Stavanger is a state-of-the-art sixth generation deepwater and harsh environment semi-submersible rig. The drilling platform is designed for operations in harsh environments and water depths of up to 3,000 metres.
It is equipped with a full conventional mooring spread for operations in water depths from 70 to 500 metres.
"The Deepsea Stavanger will be used for the first deepwater drilling campaign ever conducted in Tanzania," said Ofdjell in a statement.
Blocks 1, 3 and 4 offshore Tanzania cover a 28,050 square kilometre area of the Mafia Deep Offshore Basin and northern portion of the Ruvuma Basin, located in water depths ranging from approximately 100m to greater than 3,000m.
In October 2005, Ophir Energy was awarded a 100 percent interest in Block 1, offshore Tanzania. The Tanzanian government has back-in rights of just 12 percent in the event of a commercial discovery.
The UK company acquired a 100 percent interest in Blocks 3 and 4 which commenced in June 2006. The Tanzanian government has a back-in right of just 15 percent in the event oil is discovered in these two blocks.
Apart from the potential of striking oil, the company said its Tanzanian assets also have natural gas reserves.
"The Group is optimistic that the petroleum system in the deepwater areas may be oil-prone but is also considering whether a gas-prone system may be commercially attractive as the structures mapped are substantial," said Ophir Energy on its website.
"The potential size of the accumulations means that, in the event of gas being discovered, a viable LNG (liquefied natural gas) programme is likely to exist."
In a related development, Australia’s Beach Energy Limited last week agreed to invest at least $46 million in Tanzania searching for oil and gas in the unexplored western Lake Tanganyika area.
The company has already signed a Production Sharing Agreement (PSA) with the government.
The Minister for Energy and Minerals, William Ngeleja, told journalists in Dodoma that the contract with the Australian firm brings to 14 the number of oil and gas explorers operating in Tanzania.
According to the Chairman of the Tanzania Petroleum Development Corporation (TPDC), Robert Mboma, the Lake Tanganyika concession was highly prospective for oil.
The government is understood to be negotiating more PSAs with foreign companies in other areas such as the northern part of Lake Tanganyika and Malagarasi.
The search for oil in Tanzania has gained momentum since it started way back in the early 1950s.
There are already concerns that the potential influx of petrodollars could encourage corruption, harm the environment and result in the so-called "resource curse."
Uganda is already set to attain oil producer status in the near future. The neighbouring country's oil assets are situated in the Lake Albert basin, in the west of the country with proven reserves of at least 700 million barrels of oil.
Africa's new oil producers are under pressure to effectively manage production and ensure that oil production benefits the population. The problems experienced in Nigeria and elsewhere in the continent are a good example of oil production gone wrong.