President signs hydrocarbon law as his term winds down

August 5, 2015 2:18 PM

The law, seen by Reuters, sets out royalties and other payments that energy companies will have to pay to the government.

Tanzanian President Jakaya Kikwete is seen during a meeting with the Swedish king at the Stockholm Palace, during his visit in Sweden June 4, 2015. REUTERS/Bertil Ericson/ TT News Agency

Tanzanian President Jakaya Kikwete signed into law on Tuesday legislation aimed at putting in place a legal and regulatory framework to govern its hydrocarbons industry, his press service said.

East Africa has become a new oil and gas frontier after a string of discoveries that producers hope to exploit to supply Asian markets. Tanzania estimates it has more than 55 trillion cubic feet of natural gas but has yet to make oil discoveries.

"This is the last time that President Kikwete will give his assent to legislation passed by parliament before he steps down in early November 2015," the president's office said in a statement.

Parliament passed the long-delayed 2015 petroleum law on July 5 after a wrangle against the legislation led to the suspension of over 40 opposition lawmakers.

Opposition members of parliament had called for the legislation to be withdrawn to give industry players and non-governmental organisations time to scrutinise it.

Under the terms of the law, energy companies will pay a 12.5 percent royalty for oil and gas production in onshore or shelf areas and 7.5 percent for offshore output

The state's share of profit on natural gas production would range from a minimum of 60 to 85 percent, pegged on specific daily gas output.

Kikwete also signed into law the Tanzania Extractive Industries (Transparency and Accountability) legislation, which aims to improve governance of the country's hydrocarbons industry.