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‘Historical Feat’: Tanzania, Mauriel&Prom Strike a Deal to Double Tanzania Shares in Mnazi Bay Gas Project

Tanzania's state firm TPDC has paid USD 23.6 Million to acquire a 40 percent stake in the Mnazi Bay project. The deal will see joint operation in the project, voting rights for TPDC, and long-term secondment for its staff.

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Tanzania and French oil company Mauriel&Prom have reached an agreement for Tanzania to acquire 20 percent shares in the Mnazi Bay gas project. Two agreements were signed at the Tanzania State House on February 3, 2024: the shares acquisition agreement and the joint operating agreement.

Tanzania’s President Samia Suluhu has described the new arrangement as a ‘historic feat’ for the Tanzania government. The agreement will now put the shareholding structure at 60 percent for Mauriel & Prom and 40 percent for Tanzania, through the Tanzania Petroleum Development Cooperation (TPDC).

Before the acquisition, the share structures in the project were 48.6 percent for Maurel & Prom who also operates the project; 31.94 percent for Wentworth Resources, and 20 percent for TPDC. On December 05, 2022, Mauriel & Prom and Wentworth reached an agreement for the cash acquisition of Wentworth shares in the Mnazi Bay project.

While the total purchasing cost for the Wentworth shares was about USD 75 million, TPDC has reimbursed Maurel & Prom the purchasing cost of the 20 percent of shares owned by Wentworth for a total of USD 23.6 Million. The deal came into play after Mauriel & Prom had completed the acquisition of Wentworth shares.

Tanzania Involvement

Tanzania describes this acquisition as an important step for its energy security but also in the right direction in the protection of its interests.

“Production sharing agreement with investors gave TPDC a 20 percent stake for twenty-five years, said President Samia. “When we received a notice of intention to sell shares, I directed my minister to ensure that we purchased twenty percent of those shares,” added President Samia.

Nicolas Engel, M&P Country Director (left) and Mussa Makame (right) during the signing of joint operation agreement

At present, the Mnazi Bay project contributes about 48 percent of the gas needed for the production of Tanzania’s electricity, and 60 percent of Tanzania’s energy comes from natural gas. The project has about 641 billion cubic feet of recoverable natural gas with a daily production of about 120 million cubic feet, this makes Mnazi Bay a crucial project for Tanzania’s energy security.

Due to this critical need for energy security, Tanzania decided to exercise its right of first refusal.

“The Tanzania Petroleum Act 2015 gives TPDC first right of refusal in case any shareholder in the project wants to sell their shares. After learning about the intention to sell, TPDC assessed its position and decided to go along into purchasing shares, this was done following the laws and provisions of the contract,” said Mussa Makame, TPDC Managing Director.

Negotiation Pressure

According to TPDC, negotiation for Tanzania’s intention to acquire the floated shares started in April 2023. This negotiation reached a climax on December 21, 2023, when Maurel & Prom announced the completion of the acquisition of Wentworth shares and provided a month for TPDC to exercise its call option, as per the prior agreement between the two.

Tanzania Minister of Energy, Doto Biteko, described the negotiation period as ‘high on pressure’ with some advising TPDC to leave the matter for private actors.

“When there was a proposal for us to find somebody else to purchase the shares, Madam President, you asked me one question why can’t we do it ourselves,” said Minister Bitteko.

“Even when our counterpart in the negotiation was suggesting that we stick to tax collection and let it to them to find a buyer, your question was lingering in my head, and we made it possible at last,” continued Biteko who also serves as a Deputy Prime Minister.

Minister Bitekko explained that due to the tight deadlines, the negotiation team and the Ministry had to work throughout end year holidays.

“At times during the negotiation, the other parties will tell you if you don’t do it on this day, the deal is off, our team almost thought we were going to lose, but we made it,” added Biteko while congratulating the negotiation team.

Political Engagement

President Samia explained that when the Indonesian President, Joko Widodo visited Tanzania in August 2023, this was one of the issues that they spoke about at length.

“I spoke to President Widodo on this issue at length because I believed it needed political guidance,” said President Samia.

Indonesian state energy company Pertamina is the largest shareholder in Maurel & Prom following the takeover bid in 2017.

Some of the gains that Tanzania will get from the new deal include getting voting power in the operation, and TPDC staff will have the right to long-term secondment in the project operations.

TPDC also says, that two wells will be drilled, and there is an agreement to ensure there is an increase in production of about 20 million cubic feet.

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