New cry of foul over oil exploration deal THIS DAY A CONTRACT signed between the Ministry of Energy and Minerals and StatoilHydro company of Norway allows the foreign company to retain a cool 90 per cent of revenue earned from the sale of oil it extracts from Tanzanian soil, it has been learnt. The revelation was made in Dar es Salaam yesterday by Norwegian journalist Erik Hagen, who is on assignment in the country for a news agency monitoring Norwegian companies operating abroad. Speaking in an interview with THISDAY, Hagen said he and his bosses at the news agency Norwatch had been so shocke by what they saw in the StatoilHydro reports that it was decided to send him to Tanzania to find out more. He said his assignment includes learning more about the agreement between StatoilHydro and local authorities, including the Tanzania Petroleum Development Company (TPDC). StatoilHydro is one of over 20 foreign companies which have signed oil production sharing agreements with the Ministry of Energy and Minerals. The company, which is owned by the Norwegian government, is searching for oil in Deepwater Block 2 off the coast of Tanzania, in the Indian Ocean. The company says on its website that should commercial discoveries of oil be made, the TPDC will have the right to take a 10 per cent participatory interest. It also says the Block 2 that the agreement refers to lies in water depths down to 3,000 metres, and is so far unexplored. We were amazed�the conditions are so generous. Nothing like that could happen in Norway. If a foreign company is lucky enough, it might get 10 per cent of revenue�not the host country, Hagen said. He wondered how the host government in this case could have accepted such a poor production sharing agreement which is far from internationally-acceptable standards. THISDAY has learnt that StatoilHydro also has oil production sharing agreements with the Angolan government through state-owned company Sanangol P&P. Says the StatoilHydro website: Angola is one of StatoilHydros most important priority areas. More than half of our non-Norwegian oil production currently hails from this country. It says StatoilHydro collaborates with Sonangol P&P in petroleum exploration and production, stating that discoveries made off the Angolan coast in recent years are among the largest in the world. Of the revenue sharing procedure, the website says StatoilHydro owns 20 per cent of one block, 23.33 per cent in another block, and 13.33 per cent each in two other blocks, whereby Sonangol P&P hold the remaining shares in each case. The share ownership structure also determines the revenue sharing procedure, it says. In a statement released last April, the government announced the signing in Dodoma of a production sharing agreement (PSA) between the Ministry of Energy and Minerals, TPDC and Statoil AS (Tanzania) for petroleum exploration and production over Block 2 of the deep sea. Under the agreement, StatoilHydro is expected to spend a minimum of $10m (approx. 12.5bn/-) in the first four years for review of existing data and acquisition of total 5,800 kilometres of new seismic data, and at least another $30m (approx. 37.5bn/-) to drill an exploration well in the next four years. In the three years following that, the company is expected to spend at least $25m (approx. 32bn/-) more to drill one more exploration well, the agreement states. However, the statement was silent on revenue sharing once commercial production starts. According to the statement, the Minister for Energy and Minerals, Nazir Karamagi, signed on behalf of the government, managing director Yona Killagane signed on behalf of TPDC, and StatoilHydro chairman Jan Vollset signed on behalf of the Norwegian company. Also present at the function was TPDC board chairman General (rtd) Robert Mboma and Norway�s Ambassador to Tanzania, Jon Lomoy. The Statoil block, which is on the eastern part of the Mandawa Coastal Basin, has an area of 11,099 square kilometres. According to the statement, the signing brought the total number of active production sharing agreements in Tanzania to 17.