Swala Energy JV Partners Risk Losing Kilosa-Kilombero in Tanzania

Kilosa-Kilombero block operator Swala and joint venture partners Otto Energy, Tata Petrodyne and MV Upstream are in the risk of losing their license with every indication they are likely to meet their commitment obligations following their ongoing dispute and court case in the Australian high court.

The partners had earlier received a one year extension expiring February 2017 from Tanzanian Petroleum Development Corporation (TPDC) and Ministry of Energy and Minerals (MEM) within which they were to drill a well at the block.

An earlier planned drilling at the Kito prospect has however been postponed following squabbles arising from a failed joint farm-in by Tata Petrodyne and ‘un-finalized’ agreements thereafter.

According to Otto Energy there is likely to be an ensuing standoff until the outstanding issues are settled out of court or at the high court.

“JV issues need to be resolved before drilling planning can re-commence,” Otto Energy managing director and CEO Mathew Allen during the latest annual general meeting presentation last week.

Among other outstanding issues include default notices by both parties where Otto has accused the operator for failure to satisfy the joint venture of its solvency while the latter has accused Otto and Tata Petrodyne for failure to pay July 2016 cash calls of US$240,000.