Announcement of IDA Approves Credit for Tanzania’s Petroleum Exploration Project on June 16, 1980

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA NEWS RELEASE NO. 80/100 June 16, 1980 IDA APPROVES CREDIT FOR TANZANIA'S PETROLEUM EXPLORATION PROJECT Tanzania will be receiving a $30 million credit for assessing the hydrocarbon potential in the Songo Songo island area from the International Development Association (IDA), the World Bank's affiliate for concessionary lending. This will be the first lending operation in Tanzania from the World Bank or IDA for a petroleum exploration project. The $33 million Songo Songo Petroleum Exploration Project, the first phase of Tanzania's drilling program wi 11 provide for the drilling of two wells, one on-shore and one off-shore, at the Songo Songo area, and if success- ful, t\lllO more wells will be drilled. Consultant services will also be sought to help strengthen the • Ministry of Water, Energy and Minerals' capability in energy sector planning and pol icy formulation. Expert advice will also be provided to help the Tanzania Petroleum Development Corporation's capacity to implement the project. Provisions have also been made to train the corporation's local staff. Two wells sunk earlier in the Songo Songo area have current proven reserves of gas estimated at 100 billion cubic feet. Subsequent tests conducted last year confirmed possibilities of an oil accumulation together with gas. If oil is found in commercial quantities, it would reduce Tanzania's petroleum imports and thus its foreign exchange expenditures. The IDA credit is for 10 years, including three years of grace. No interest is charged but the credit carries a service charge of 3/4 of 1% per annum to meet IDA's administrative costs. The European Investment Bank wi 11 co-finance $500,000 and the Government of Tanzania $2.5 mill ion of the total cost of the project. NOTE: Money figures are expressed in U.S. dollar equivalents . • FOAM NO. 1121 (5-78) • T E C HN I CA L DA T A PROJECT: S~ngo Songo Petroleum Exploratton COUNTRY: Tanzanta TOTAL COST: $33 mil lion IDA FINANCING: $30 mlllion for 10 years, tncludt~g 3 years of grace~ N9 interest is charged but carries a service ch~rge of 3/4 of 1% per annum OTHER FINANCING: Government of Tanzania, $2.5 million; European Investment Bank, $0.5 million. IMPLEMENTING ORGANIZATION: Tanzania Petroleum Development Corp. P • 0 • Box 2 77 4 Dar es Salaam Cable Address: TPDC, Dar es Salaam Tanzanta Telex: 41219 and 41293 PROJECT DESCRIPTION: It includes: a) drilling of two wells; one on-shore and one off-shore, at the Songo Songo field area; ·b) strengthen- ing the Ministry of Water, Energy and Minerals'· capabi'lity in energy sector planning and pol icy formulation; c) provision of technical assistanc.e to the Tanzania Petroleum • Development Corp. and training for its staff to help the organization strengthen its capacity to implement the project. PROCU.REMENT: The drilling contract and associated services wi11 be procured on the basis of International competitive ~ldding. Contracts for the procurement of equipment and material, not exceeding $100,000 each, will be awarded through limited international tendering procedures. Other specialized servi~es will be contracted for dfter obtainTng quotattons from at least three supplters. CONSULTANTS: A total of 242 man-months of consultant and expert services will be required for this pro.iect of wh1ch 87 man-months wf ll only be required if the second phase of the drilling program is Implemented . ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: n.a. 1983 - 0 - •