Swala Oil will begin to drill the Kito-1 exploration well in 2019 next year, if all goes as planned.
The Tanzanian Oil and Gas firm has entered into an agreement with two parties; Tanzania Petroleum Development Corporation (TPDC) and the Tanzania Wildlife Management Authority (TAWA) that will ensure that the Company receives, all necessary permits to begin the drilling.
Swala is the first Oil and Gas company listed on an East African Stock Exchange with a significant local ownership. Swala holds assets in the world-class East African Rift System with a total net land package in excess of 14,000 km2 as well as a 7.93% interest in PAE PanAfrican Energy Corporation.
A statement from Swala notes that the Kito-1 prospect, assessed by an independent third party is estimated to contain up to 185 million barrels of oil.
“Of this, and if successful, the equivalent of nearly 80% would go to the Government of Tanzania through a combination of royalties, profit-sharing and various taxes, a sum of nearly $9.9 billion (TZS 21.9 trillion) at current oil prices.” Swala says in a statement.
Three years ago, the Company processed the additional seismic data and prepared to drill Kito-1 in 2016. However, the drilling area is contained within a Game Controlled Area and the Company carried out an Environmental Impact Assessment (“EIA”) assessing the potential impact of the drilling on the local environment.
The drilling had been scheduled to begin in 2016 but the operations had to be postponed to 2017 following the EIA review process by institutions under the Vice president’s Office (VPO). The reviewing office then insisted on certain changes that were detrimental to the environment and which were eventually reconsidered.
In 2017, and following the approval of the EIA, the Company required a final permit from the Tanzania Wildlife Authority (“TAWA”). The drilling operation has since been suspended (under Force Majeure) till of recent signing of MoU that will see Swala get permit to drill the area in 2019.
New discoveries have been announced by industry participants in a number of licences along this trend that extend the multi-billion-barrel Albert Graben play so successfully developed by Tullow Oil into the eastern arm of the rift. Swala has an active operational and business development programme to continue to grow its presence in the hydrocarbon provinces of East Africa and globally.