Swala Oil & Gas Granted Extension Of Tanzania’s Kilosa-Kilombero Licence

Swala Oil & Gas (Tanzania) plc has announced that it has been awarded an extension to the Kilosa-Kilombero licence by the Ministry of Energy and Minerals. This extension runs to the 20th February 2018 and is to be deducted from the First Extension Period (as that is defined in the Production Sharing Agreement.

TPDC has also reiterated its demand for bank guarantees from the co-venturers, earlier reported by OilNews Kenya. The bank guarantees required by TPDC amount to $6 million to meet the minimum commitment cost of drilling an exploration well to 3,000m or basement. This amount can be drawn down as the exploration activity progresses. Swala’s drilling costs of up to a maximum of $2.5 million are to be paid for by Tata Petrodyne Limited under the terms of the Farm-Out Agreement between the two dated October 2015.

“We are delighted that the hard work that the Swala and TPDC teams carried out in late 2016 has resulted in MEM awarding this extension to drill the Kito-1 exploration well. TPDC have required the coventurers to make a tangible commitment to the development of this well, which is scheduled to be drilled in 3Q 2017. Swala is re-engaging the project team that progressed the Kito campaign in 2016 and will benefit from the work already carried out along with the long-lead items that are held by Swala in anticipation of a drilling campaign,” said Swala CEO Dr. David Mestres Ridge.

Meanwhile Swala has said that a default dispute issued by its JV partner Otto Energy has been terminated. According to the operator its partner was time barred after failing to follow the arbitration route as prescribed by the Kilosa-Kilombero Joint Operating Agreement for a party wishing to resolve a dispute within the set timeframe of 60 days. Under the JOA arbitration is agreed to be the exclusive and final means to resolve disputes arising.

Swala then points out that it has advised Otto that, under the terms of the JOA, Otto should have progressed the dispute resolution mechanism through to arbitration by the 27th September.

“Swala has always rejected the grounds on which Otto sought to base its claim. The fact that, over the past seven months, Otto has failed to progress the dispute resolution process set out in the JOA underlines Swala’s position that this was a meritless claim. With the default lifted the Joint Venture can now progress the planning to drill the Kito-1 exploration well in 3Q 2017, and we shall advise the market of developments as that programme progresses,” Ridge concluded.