Oil & Gas

The Tanzanian government is ramping up efforts to attract foreign investors into its oil and gas sector, acknowledging the immense costs, high risks, and rapidly shifting global energy trends. According to PURA’s Director General, Mr. Charles Sangweni, preparations are underway for the country’s fifth licensing round for oil and gas exploration blocks. This move is aimed at reigniting investor interest, expanding exploration, and generating broader economic benefits such as job creation and increased local content.

Mr. Sangweni emphasized the financial burden associated with upstream exploration, stating that a single onshore well can cost up to $20 million, while offshore operations can soar beyond $175 million—with no guarantee of success. He stressed that local investors, including TPDC, are ill-equipped to handle such losses without facing intense public and political backlash. In contrast, foreign firms with global portfolios are better able to manage these risks by offsetting losses in one country with profits in another.

He also highlighted the sixth-phase government's pragmatic approach to existing Production Sharing Agreements (PSAs). Instead of suspending operations, the government is opting to renegotiate and restructure contracts to provide more regulatory clarity and support investor confidence. Tanzania has undertaken significant reforms, including updating outdated petroleum laws and revising the Model PSA, to create a more predictable and attractive investment climate. These changes aim to address uncertainties triggered by past oil price crashes and long-standing structural issues in the sector.

Tanzania has already seen notable progress, with natural gas reserves discovered in Mnazi Bay and Songo Songo leading to the development of key infrastructure such as processing facilities and the strategic gas pipeline to Dar es Salaam. Between March 2021 and March 2025, Tanzania produced over 301 billion cubic feet of natural gas, a major milestone in its energy journey. PURA has also focused on maximizing local benefits, with 85% of oil and gas jobs held by Tanzanians and 60% of services and goods sourced locally. These efforts, along with strong financial oversight—including the recovery of over Sh340 billion—are reshaping Tanzania's energy sector into a globally competitive, investor-ready environment.