tpdc statement regarding eyasi termination

Mining company Swala`s claims misleading, declares TPDC
By Polycarp Machira
22nd February 2014

Swala Energy LimitedThe Tanzania Petroleum Development Corporation (TPDC) has refuted recent claims by Swala Oil&Gas Tanzania Limited, terming it misleading and contains multiple inaccuracies.

Last Friday, February 14, Swala Energy Limited (based in Australia), a parent company of Swala Oil and Gas Tanzania Limited (SOGTL) issued a statement to the Australian Stock Exchange that TPDC has terminated the negotiations for a Production Sharing Agreement in respect of Lake Eyasi -Wembere Basin.

Swala Energy Limited further alleged that TPDC’s decision was questionable and that it raised questions of transparency in respect of the process to be followed in the ongoing licensing round and TPDC’s commitment to the local content and participation of Tanzanians.

“SOGTP originally bid for the Eyasi licence on 50:50 basis with a joint bidding partner. The joint bidding agreement allowed either party to withdraw at any stage, with the remaining party assuming the withdrawing party's interests in the licence.”

“The joint bidding partner withdrew from the process and TPDC deemed this to be a breach of the tender guidelines that governed the process. SOGTP disagrees with TPDC's interpretation and has advised TPDC that it will seek advice on challenging this decision,” reads the statement in part.

Dr David Mestres Ridge (CEO) said they are disappointed that TPDC has reached such a questionable decision, especially considering SOGTP’s track record in Tanzania over the past two years.

He said the company has invested significantly in the negotiation for Eyasi and TPDC's decision raises questions not only in respect of the transparency of the process that will be followed in the current licencing process but also in respect of TPDC's commitment to local content and Tanzanian participation.

“We remain committed to Tanzania and shall advise the market further once the outcome of our challenge has been determined.” he noted.

But the TPDC has noted with serious concern the statement by Swala Energy Limited and informs the general public that the statement contains multiple inaccuracies and is misleading.

In a statement signed by the managing director, TPDC said it invited the tender through restricted tendering from five oil exploration companies including Swala Oil and Gas (Tanzania) Limited on April 30, 2012.

Three bids were received including that of Swala Oil and Gas (Tanzania) Limited in joint venture with Pura Vida Energy NL (based in Australia) on 50 percent participating interest between the two companies.

According to SOGTL the joint venture was intended to demonstrate that the pair had the requisite financial resources, technical expertise and appropriate experience to undertake the exploration work.

After the bid evaluation, the joint venture between SOGTL with Pura Vida Energy NL scored the highest points based on the criteria set forth in the bidding document, which included, work programme technical, financial and experience capabilities.

In addition the extent of local participation and how much the Government will get from the license were considered.

The Joint Venture (SOGTL and Pura Vida Energy NL) was invited by TPDC for pre contract PSA negotiations on March 28, 2013.

“This stage does not in any way constitute an award of the tender. An award is only made after successful completion of pre-contract negotiations,” read the statement.

In the course of negotiations, M/s Pura Vida Energy NL, withdrew from the negotiations stating that they wanted to focus on the newly acquired exploration rights in Morocco, Gabon and Madagascar.

According to the managing director, the withdrawal by Pura Vida Energy NL materially and substantially affected the joint bid and the negotiations for that matter for several reasons.

First, the invitation for pre-contract negotiations was based on the technical expertise, financial resources, and the experience of the consortium with participating interest of 50 percent each.

.After the withdrawal of Pura Vida Energy NL the 50 percent interest of the joint venture could no longer support the application.

Secondly, the evaluation of the bid was based on the strength of the joint venture partners and the award could have been made to a joint venture upon successful pre-contract negotiations and not to any of the individual firm.

The withdrawal of one party from the joint venture during pre-contract negotiations therefore made the joint venture ineligible.

TPDC argues that the reason for SOGTL associating with Pura Vida Energy NL was to enhance their financial and technical capability and bring in the required experience.
After the withdrawal of Pura Vida Energy NL the accrued advantages of the combined efforts fell apart.

Further, in the Deed of Termination and Release dated January 15, 2014 between M/S Pura Vida Energy NL and M/S Swala Oil and Gas Tanzania Limited, the two declared the Joint Bidding Agreement was terminated and lost its legal basis.

The Deed of Termination and Release was signed by Dr. David Mestres Ridge and Neil C. Taylor representing SOGTL and by Damon Neaves and Chen Chik Ong on behalf of Pura Vida Energy NL.

“By reason of the forgoing circumstances, pre-contract negotiations could no longer be tenable as the joint venture ceased to exist on January 15, 2014” said the statement.

SOURCE: THE GUARDIAN

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