Swala Energy Obtains One Year Licence Extension To Each of its Tanzania Licences

Australian explorer focusing on the East African Rift System Swala Energy has announced that the Tanzanian Ministry of Energy and Mining (MEM) has agreed to extend the period within which an exploration well must be drilled in each of the Kilosa Kilombero and Pangani licences in Tanzania to the 20th February 2017.

According to a statement from the company the one-year extension is to be deducted from the 4-year additional exploration extension period currently due to commence on 20th February 2016, resulting in the additional exploration period having a duration of three years.

Under the Production Sharing Agreements that govern activity on each of these two licences, the Joint Venture with Otto Energy as the other partner was originally obliged to drill an exploration well in each licence by the 20th February 2016.

Already the JV partners have carried out a seismic survey that was completed in December 2014 and in the same month the JV and the Tanzanian Petroleum Development Corporation (TPDC) agreed to carry out the processing and interpretation of the seismic data during the first half of 2015.

This relatively little period left according to the JV made it hard to confirm drilling locations and secure long lead-time items, thus leading to the request to TPDC and MEM to allow it to complete its exploration drilling obligations in the next exploration phase.

“The joint venture has been actively preparing to drill the two licences and we are grateful to MEM and TPDC for their pragmatic flexibility in respect of the drilling timetable,” says Swala CEO David Mestres Ridge.

In June, Swala Oil and Gas (Tanzania) plc appointed an Operations Manager with responsibility for the drilling campaign and it is in the process of engaging a consultant to carry out the Environmental Impact Assessments for the drill locations.

In parallel, it has been further interpreting the seismic data so as to optimise those eventual drilling locations.

“The extension of the time limit for completing the exploration drilling allows the JV to continue its preparatory work with the comfort that all steps are being taken to maximise the chances of success and minimise costs whilst not compromising on either health, safety or environmental integrity,” Mestres concludes.

Both Swala Energy (operator) and Otto Energy have 50 percent interest in the licenses.

Meanwhile Swala Energy has advised that, following a review of its assets and operations and as part of its continuing cost reduction exercise, it has decided to exit from Zambia so that it can continue to focus on its core areas of East Africa.