Tanzania's long awaited Gas Policy is expected to reach the public domain at the end of the month. In this briefing, we identify exactly what regulations are in development and also report on uncertainty surrounding the status of existing contracts.

Gas Regulations

Significant natural gas finds offshore Tanzania have necessitated a review of existing legislation and the development of entirely new policy to regulate exploitation of the country's resources.

On a statutory basis, the oil and gas sector in Tanzania is currently governed by the Petroleum (Exploration and Production) Act of 1980 ("Act") which primarily focuses on upstream activity.

In addition to likely amendments to the Act (which are not expected to be made until next year), the following new regulations are being developed by the Ministry of Energy and Minerals ("MEM") and the Tanzania Petroleum Development Corporation ("TPDC").

(a) Gas Policy ("Policy")

The Policy is expected to be tabled in the next Parliamentary session which begins on 30 October 2012 and together with the Master Plan will establish a framework for the production and utilisation of gas in Tanzania.

Dares Salaam based Policy Research for Development and consultants from LNG-producing Trinidad and Tobago have been involved in the development of the Policy which is currently being reviewed by the MEM and TPDC before being tabled for consideration by Parliament.

In general, policies are not debated in Parliament in Tanzania. Parliament may push for greater scrutiny and debate over the Policy before it is published but this is not guaranteed and in theory the Policy could be published without any public examination.

(b) Gas Utilisation Master Plan ("Master Plan")

Expected to be published soon after the Policy, the Master Plan will provide focus on key areas such as the extent to which Tanzania will seek to retain its gas resources for use domestically. International investors will have a clearer picture of the extent to which they will be free to market Tanzania's gas reserves once both the Policy and the Master Plan are in the public domain.

(c) Gas Supply Bill ("Bill")

The Bill was first drafted and considered in 2009 and is now in the process of being harmonized with the Policy and Master Plan. The Bill will regulate downstream activities in the gas sector (with the amended Act focusing on upstream activities).

Since Tanzania's Parliament only sits in October, February and April each year and any new laws require three readings, Parliamentary consideration and approval of the Bill is not expected until next year.

Contract Review

Tanzania's Minister for Energy and Minerals, Professor Sospeter Muhongo, was last month widely reported to have ordered a review of all oil and gas contracts entered into by the Government of Tanzania.

On 25 September 2012, Clyde & Co issued an update clarifying the reports and confirming Professor Muhongo's statement to Reuters that he had been "misquoted" by local media.

The Minister explained that the proposed review was "procedural" in nature and would be conducted for the purpose of informing the development of the imminent Policy rather than with a view to renegotiating contracts or threatening revocation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.