Member Info for Ufufuo

Protecting Foreign Exchange and Reducing Import Dependence

Tanzania spends considerable foreign exchange on imported petroleum products. Expanding domestic gas supply helps reduce reliance on imported fuels for electricity generation. Every megawatt generated from natural gas instead of diesel is a reduction in foreign exchange leakage. Over several years, this reallocation can meaningfully improve the country’s balance of payments and exchange-rate stability.

Gas also provides a more predictable pricing framework. Unlike global petroleum markets that swing with geopolitical tensions, local gas supply is shaped primarily by domestic production levels and regulated pricing structures. This stability benefits both consumers and industries that depend on energy price forecasting to plan investments.

Risks That Could Shape the Project’s Final Economic Impact

The pipeline’s economic promise rests on three critical factors: sustained field output from Ntorya, strong demand from power producers and industrial consumers, and efficient operation of the Madimba plant. Underperformance in any of these areas would weaken the cost-benefit logic of the pipeline.

Additionally, delays, cost overruns or operational inefficiencies could raise the project’s final cost structure, pushing breakeven further into the future. The presence of experienced EPC contractors mitigates the execution risk, but the long-term gains still depend on coordinated policy, reliable gas pricing and stable industrial demand.

A Strategic Investment in Tanzania’s Energy Future

The Ntorya–Madimba pipeline is more than a transport structure. It is an economic instrument designed to cut energy costs, support manufacturing, reduce fuel imports and unlock regional development around Mtwara. If executed well, it will strengthen Tanzania’s energy security and enhance its competitiveness in the region.

In an economy where industrial growth depends heavily on affordable and stable energy, this project positions Tanzania to shift from reactive energy management to long-term strategic supply. The coming years will show how effectively the country uses this new capacity to drive industrial transformation.

An article in the Tanzanian media today outlining the strategic importance of the Ntorya to Madimba natural gas pipeline:

https://uchumi360.com/energy/oil-gas/tanzania-moves-to-strengthen-energy-security-with-ntoryamadimba-gas-pipeline

Excellent post P26

Investors should be wary of one-sided narrative that frames Orca as the victim. Simplistic claims or suggestions that Orca is being wronged and that Aminex should be viewed as high risk due to this dispute risks misleading investors.

In summary:

• The PSA is confidential, and contractual clauses regarding Protected Gas duration remain undisclosed and disputed.

• Tanzania firmly interprets the PSA as permitting or requiring the Protected Gas regime to continue until October 2026.

• Orca’s interpretation of an end to Protected Gas in July 2024 is disputed and part of a larger arbitration process.

• No certainty exists at this stage as to who is right or wrong—the legal dispute must play out.

• Investors should therefore treat Orca’s public claims with caution. This dispute is about interpretation and enforcement of a complex contract, not a straightforward case of “wronged investor.”

I have posted before about how Orca’s PSA is different to ARA/Aminex’s and is comparatively complex and disadvantageous. So, on so many levels, Aminex’s situation is not comparable. The fact that Orca's relationship with the Tanzanian authorities has been dreadful for many years has also been discussed by many here previously - the Tanzanian's see Orca as greedy and not sufficiently interested in developing the Songo Songo field (sitting on their laurels and taking large salaries and dividends).

The bigger picture? As Tanzania’s largest gas producer (by volume produced), Orca’s gridlock only strengthens Aminex and ARA’s strategic position. With Orca’s licence ticking down, Tanzania has strong incentives to advance new sources — most notably, Ntorya. Aminex stands to benefit, not suffer, from the fallout of this dispute.

Let's debunk some more of prosciutto's recent deliberately misleading posts. On 29th Oct, prosciutto posted details of the legal challenge being raised by Orca against the Tanzanian authorities – which are centred around disagreement on ‘Protected Gas terms – and suggested that this dispute spells the end of the road for Orca, and that Aminex would be next in line.

It is critical to underline that the ongoing dispute between Orca Energy and the Tanzanian government is rooted in fundamentally conflicting interpretations of their Production Sharing Agreement (PSA) and related contracts—and the full PSA text remains confidential. While Orca asserts that the Protected Gas regime ended on July 31, 2024, and that all gas production thereafter should be "Additional Gas" to be sold commercially, Tanzanian authorities have taken a firm, opposing stance.

Official communications from the Tanzanian Ministry of Energy clearly show their position that the PSA allows or requires the extension of the Protected Gas regime until the expiry of the Development Licence on October 10, 2026. For example, a directive from the Permanent Secretary instructed the TPDC to continue Protected Gas production until the license end date. TPDC has acted consistently with this view, rejecting Orca’s attempts at negotiation and continuing to impose the Protected Gas regime beyond Orca’s claimed July 31, 2024 termination.

This is not merely a difference of opinion; the Tanzanian authorities are actively enforcing what they interpret as a contractual right to maintain the Protected Gas regime. The Tanzanian stance contradicts Orca's narrative and is a core reason why the dispute escalated to formal arbitration and legal action (seeking over $1.2 billion in damages).

Until a neutral arbitral tribunal or court has reviewed the full contract and rendered a definitive judgment, no party’s interpretation—including Orca’s—can be taken as established fact. Orca’s public statements selectively present the portions of the PSA that support their case, but do not reflect the full contractual framework.

I’ll be too kind and suggest you are being a tiny bit harsh on yourself there RoJo. Genuinely though, self reflection is a great strength. So, well done 👏

Let's debunk some more of prosciutto's recent nonsense. On 8th Oct, prosciutto said:

“Orca supplies Power Gas and Compressed Natural Gas but, the most impressive sector is the high growth Industrial Gas sector. They have a 50km low pressure distribution system constructed and operated by the Company in the city of Dar es Salaam. They currently have 50 industrial customers connected and there are ongoing negotiations with several others. The continuous expansion of the ring main distribution system, targeting industrial customers, implies growth. The SongoSongo gas valves will not be turned off Oct 11, 2026. Two gas processing plants, one Power Plant and over 50 Industial customers will not be left stranded”

The first and most important point is that, if Orca’s license is not renewed, they will have no right to produce gas – none at all, regardless of who for. Nothing. Nada. Finito. Any assets Orca has in Tanzania would be rendered completely redundant. We could just leave it there but for completeness sake…

Prosciutto mentions Songo Songo having its own power plant. No longer true I’m afraid. The Power Purchase Agreement for the Songo Songo power plant was not renewed, and so, on 31 October 2024 the power plant was shut down. No doubt in part because it was end of life – the 2024 power system master plan confirms as much. As such it would need considerable sums to be spent on it to recommission it and modernise it. Considering the declining production capacity at Songo Songo and the legal dispute with Orca, it is perhaps no surprise that the authorities took the decision to call it a day with the Songo Songo power plant. So, the power plant mentioned is a dead duck.

Regarding prosciutto’s suggestion that Orca is in negotiations to serve additional customers, Orca’s 2024 Annual Report makes numerous references to the Songo Songo gas field’s declining production capacity and how they will not spend money on trying to resolve that due to the legal dispute and uncertainty regarding the licence. Page 6 of the report stated that: “demand for gas from the Songo Songo gas field continues to exceed existing supply potential”. So, negotiations with potential additional industrial customers would be utterly pointless. Moreover, again, if their license is not renewed, they will have no gas to sell.

Regarding the suggestion that “the Songo Songo gas valves will not be turned off…” maybe, maybe not.

Orca’s Q2 2024 report (p.15) states that Orca has been advised of the following position by the Ministry of Energy of Tanzania:

“On August 5, 2024, the MoE by a letter received by PAET the MoE rejected the terms of the New GSA, and the MoE demanded that PAET propose suitable wording for an “interim arrangement” to extend the provision of Protected Gas. The letter further states that if PAET fails to do so, the other parties WILL SEEK “ALTERNATIVE MEANS” TO OPERATE THE SONGO SONGO GAS FIEL

Yes, that’s right. The Tanzanian government has explicitly stated that they are prepared to find someone else to operate the gas field. You think they won’t do it? Think back to Acacia mining. That was under the previous President who was much more bullish and anti-foreign investors. Acacia also had to allegedly be responsible for at least 6 murders, rapes, pollution, and bribery of officials! So, they were an extreme case but those issues led to Acacia licences not being renewed. The Tanzanian government was clear in 2019 that it did not want Acacia to be a party to future agreements, resulting in severe uncertainty over Acacia's long-term licence status and operations. Eventually, these issues contributed to Barrick Gold taking over Acacia's Tanzanian assets, restructuring the operations, and forming a new joint venture with the government

Coming back to Orca, two days after that letter from the Ministry of Energy, PAET/Orca issued a claim for damages of more than $1.2 billion and has since commenced legal proceedings, partly in relation to the extension of the Protected Gas regime. They have taken their case to the International Centre for Settlement of Investment Disputes (ICSID), part of the World Bank.

The case is not likely to be concluded quickly. ICSID arbitration cases usually take about three to four years from start to final award, with costs per party often exceeding USD 5 million (https://icsid.worldbank.org/resources/publications/icsid-caseload-statistics).

PAET/Orca’s license is due to expire on 9th October next year. So, it is highly likely that the ICSD case will not be resolved by that time. This bitter dispute will be ongoing up to and beyond the licence expiry date. That surely doesn’t bode well for Orca.

As discussed previously, this is a situation of Orca’s own making. Their relationship with the Tanzanian authorities has been dreadful for many years – with Orca being perceived as greedy and not sufficiently interested in developing the Songo Songo gas field.

Will the taps be turned off? Maybe. But, by the sound of it, only for long enough for a new operator to be appointed and to take the reins. With all that uncertainty, no wonder the Tanzanians are so keen to expedite getting Ntorya on stream.

Let's debunk some of prosciutto's recent nonsense. Prosciutto said:

“This particular co-venturer had unpaid amounts that totaled $104,164,507.41 as of January 9, 2025. How do they get away with not paying the full amount for the gas? ... because they can”.

As usual, this is outdated information and does not reflect what has really been happening. Yes - TANESCO fell behind on payments to Orca Energy. This was primarily due to financial strain, including liquidity challenges, not due to negligence or disregard for investors. Crucially, this is a historic issue that has since been resolved.

Root Causes:

• TANESCO historically sold electricity at rates below cost-recovery levels - limiting its revenue base despite rising operational expenses.

• Technical and commercial losses—electricity theft, faulty metering, and transmission inefficiencies—significantly eroded revenue. In 2025 alone, TANESCO identified over TSh 4 billion in losses from illegal connections and meter tampering.

• Delays in government payments to TANESCO - cash-strapped and unable to fully meet supplier payment obligations.

Of the $104 million cited, only $33.7 million were actual late payments. The remaining $70.5 million was default interest—important context that was missing.

TANESCO JOURNEY TO IMPROVED FINANCIAL HEALTH THROUGH REFORM & MODERNISATION:

2013–2015 - TANESCO severe liquidity constraints due to low tariffs and high system losses. Government subsidies were inconsistent, and power outages were frequent.

2016–2018 - Power Sector Reform and Governance Support Programme (PSRGSP) launched, backed by the African Development Fund - aimed at improving financial governance. Initial steps toward tariff rationalization.

2019–2020 - Continued infrastructure investments, including rural electrification and grid expansion. TANESCO began publishing more transparent financial statements

2021–2022 - Launch of a Ten-Year Strategic Plan focused on digital transformation and financial sustainability. TANESCO recorded a Profit After Tax of TSh 109 billion, the highest in its history. Installed capacity increased to 1,727 MW, and over 500,000 new customers were connected. Total assets grew by 13% in 2022 due to major investments in generation and distribution infrastructure.

2023–2024 - Revenue recovery campaigns targeted illegal connections and meter tampering, recovering billions in lost income.

2025 - TANESCO launched a further nationwide inspection campaign targeting illegal electricity use. This initiative recovered an additional TSh 1.7 billion in lost revenue and the campaign is ongoing.

THESE CHANGES AND TANESCO’S IMPROVING FINANCES RESULTED IN TANESCO BEING ABLE TO SIGN A US$52 MILLION SETTLEMENT WITH ORCA AND TPDC TO CLEAR ARREARS

On 15th April 2025, Orca confirmed the deal - TANESCO would pay $52.0 million (the $33.7 million principal plus $18.3 million in partial default interest), with the remainder waived upon full, timely payment. TANESCO had to pay the Settlement Amount to PAET by October 2025.

The latest position regarding receivables due from TANESCO as detailed in Orca’s Q2 2025 Report is as follows:

“As at June 30, 2025, the current receivable from TANESCO was $5.9 million (December 31, 2024: $12.7 million). During Q2 2025 the Company invoiced TANESCO. $13.7 million for gas deliveries (Q2 2024: $11.1 million) and received $16.4 million in payments for current receivables (Q2 2024: $14.8 million). These amounts are inclusive of VAT. Based on the consistent payments from TANESCO, the Company recognized all amounts invoiced for gas deliveries in Q2 2025 and Q2 2024 as revenue."

"Subsequent to June 30, 2025 the Company has invoiced TANESCO $5.0 million for July 2025 gas deliveries and TANESCO has paid the Company $5.8 million to date for current year gas supplies and a further $9.9 million under the Settlement Agreement. The TANESCO long-term receivable as at December 31, 2024 was $22.0 million and had been fully provided for. Of the cash the Company received under the Settlement Agreement in Q2 2025, $16.1 million was attributed to the long-term gas receivable balance. As at June 30, 2025 the remaining $5.9 million balance was recategorized as a current receivable and was received in July. Accordingly, the provision has been reversed in full and the long-term receivable balance as at June 30, 2025 is $ nil”.

Summary:

TANESCO’s past challenges were real—but they reflected a pre-reform era. Since then, the company has modernised, improved efficiency, and honoured its obligations. The 2025 settlement proves not avoidance but accountability and progress.

The bigger story here isn’t a failure to pay—it’s a state utility rebuilding financial health under new leadership and stronger governance. That momentum bodes well for partners like ARA and Aminex and underlines how much has changed for Tanzania’s power sector.

I'm not sure it does show the real picture regarding Orca SC. It talks positively about dividends and suggest that cash flows make these sustainable despite a lack of profitability...

They completely omit to mention that:

* Their only producing asset is the Songo Songo gas field in Tanzania, which has declining production capacity.

* Orca is in a bitter legal dispute with the Tanzanian authorities and is taking them to court to seek damages for potentially as much as $1.2 billion USD.

* Considering that situation, Orca has decided not to spend further money on trying to develop the field or to address the declining production capacity.

* Orca's license is due to expire on 10th October next year. Considering they are taking the Tanzanian government to court to seek very significant sums in damages, it seems extremely unlikely that their license will be renewed. If it were to be renewed, they would find it impossible to do business in Tanzania, with the relationship with the authorities so incredibly broken.

* Those that have followed the story closely over the years will be aware of ongoing rumours of a bad relationship between Orca and the authorities, driven by a perception that Orca executives are greedy and not interested in developing the field for the benefit of Tanzania.

The real story then is that Tanzania's largest natural gas producer appears to be going to the wall. A situation of Orca's own making. Talk of dividends and working capital is like putting lipstick, a hat and a party frock on a pig...a critically ill one at that.

The real story regarding Orca and what it means for Aminex is...

* The Tanzanians will not want to be in any way reliant on Orca and will want to be free to NOT renew their license when it expires in 12 months and 16 days time.

* Tanzania urgently needs to find a way of covering the ~80mmscf/d that Orca has been able to produce in the past.

* That situation will be a key driving force behind the Tanzanians working with M&P to drill their 3 wells, and the sudden request by PURA for ARA to expedite the drilling of CH1.

The real story for actual and potential Aminex investors is that Orca's demise represents an opportunity for Aminex and ARA to help solve the looming natural gas supply issue. Also, that the Tanzanian authorities almost certainly want CH1 drilled asap so they know what the well can do in terms of production - in time to give them the production security and bargaining chips to deal with Orca.

So, Orca is an absolute basket case. However, we can thank whoever it was for brining this topic up, as it has helped to vividly illustrate the most compelling argument to believe that CH1 will indeed be expedited and is likely to happen much sooner than some expect.

All of this points strongly towards the soonest possible drill date. The Tanzanians need it done asap - leaving as much runway as possible before the end of Orca's license.

The CNG rollout in Tanzania is mighty impressive! Another 7 CNG stations for Dar by year end!

https://thebizlens.co.tz/2025/09/24/tanzania-to-expand-cng-refuelling-network-to-18-stations-in-dar/

“in that a carried interest is only as good as the contract in which it is encapsulated, and none of us here are or have been privvy to the detail of that information”

Here you go…

https://aminex-plc.com/wp-content/uploads/2024/03/181207_-EGM-Circular-web-version.pdf

See ‘PART III PRINCIPAL TERMS OF THE FARM-OUT AGREEMENT’

But, as Orca’s last annual report confirmed, production capacity from their Songo Songo gas field is declining.

They needed the SS-7 workover in order to boost production but that workover failed. Well intervention operations were terminated and all equipment demobilised from the SS-7 site.  The well remains suspended. Another failure, following their failed 3D seismic campaign which was terminated before achieving anything (using the same supplier that ARA used to such good effect).

Due to the bitter legal dispute that Orca is now engaged in with the Tanzanian government, they are not planning to spend any more money on trying to boost or even maintain production.

Recent media reports suggest that Orca’s production is affected by the JN hydro project. That’s not true. Their Annual Report stated that “despite the continued expansion of hydro power generation in Tanzania, demand for gas from the Songo Songo gas field continues to exceed existing supply potential”.

Their field is very small compared to Ntorya. It is partially offshore and so much more expensive. It is producing at maximum capacity but is in decline and with no plan to change that.

With declining production, the legal dispute where Orca is seeking damages from the Tanzanian government, and the fact Orca’s licence expires in just over 12 months time (10th October 2026), it is no wonder that the Tanzanians chose not to renew the contract for the Songas Power Plant (more than 40%owned by the Tanzanians) which was fed by Orca’s Songo Songo field. Hence that ceased operations last October. The Tanzanians are sending a pretty clear message I think.

In short, Orca looks to be royally scr*wed. I can’t see their license being extended but if it was, due to their relationship issues (a bit of an understatement) life would be incredibly difficult for them trying to get anything done in Tanzania.

Plus, before anyone says “isn’t that a worry for ARA and Aminex”? No, not really. From what I’ve heard over the years, it is a situation of their own making - perceived as greedy, with fat salaries and little interest in developing the field.

All of this plays squarely into ARA and Aminex’s hands.

I agree P26. Things a progressing very nicely.

One additional thought…

As they have issued the EOI for the gas processing facility, does that mean the testing of NT2 has been done?

They’ve made a few similar comments I think but this is from last year’s AGM presentation:

Ntorya-2 Well Test

• Conducting a test over the Ntorya-2 well for COz handling using a mobile test unit

• Test results will determine the initial processing requirements for the gas

I’ve been expecting Q1 anyway. So it’s all good.

The drill was going to be 2026 anyway. Now PURA have requested the strategy to expedite things, it points strongly towards a drill earlier in the year.

Very pleased to see evidence of yet more progress with the project. Things are moving along nicely.

Also good that Aminex is making the effort to give regular updates.

More progress. New requests for Expressions of Interest just issued by ARA:

Update on Ntorya Gas Development: Earlier today, in the Tanzanian daily The Guardian, Ntorya operator ARA Petroleum Tanzania (APT) requested Expressions of Interest for the following jobs:

• Provision of well hook-up and flowline/ pipeline construction services.

• Fiscal metering skid/station FMS on rental or

EPC basis.

• Provision of High-Integrity Pressure Protection

System (HIPPS).

• Engineering, Procurement and Construction (EPC) of Gas processing Facility.

Aminex commented “ We're pleased with this progress on our Ntorya project, the largest onshore gas gas development in Tanzania, and look forward to posting further updates”

https://x.com/aminexplc/status/1968661972351856895?s=46&t=Imk87XVoZ33GBGiQAaJ5ig

"PRIME Minister Kassim Majaliwa has called on the Ministry of Home Affairs to collaborate with the Ministry of Energy to ensure that all prisons across the country are connected to clean energy systems by 2027".

"The launch marked the beginning of a nationwide rollout of clean energy systems in all correctional facilities".

"The government has set the ambitious targets for clean energy, aiming for 80 per cent of Tanzanians should be using clean energy by 2034; this goal is being pursued through various initiatives which if supported by the private sector, the target will be achieved"

"Our intention is to rapidly accelerate the speed of deploying clean energy infrastructure throughout the country including in rural areas setups, where many people use firewood as sources of energy; we intend to maintain this rate of speed through 2034 to make sure the clean energy goals in the country are achieved".

https://dailynews.co.tz/majaliwa-all-prisons-to-shift-to-clean-energy-by-2027/

I am very much aligned to your thinking P26.

It’s taking time for stakeholders to adjust to the very positive paradigm shift that has occurred here, but the market is very slowly waking up I believe.

Apologies, I now realise that when I said that Aminex’s share of estimated resources is now more than 35 times greater than it was in the run up to the NT2 drill, I didn’t include the calculations.

So, at the time of NT2 drill resources were estimated to be 0.153 TCF. Our share was 75% of that. So, 0.1148 TCF net to Aminex.

Current estimate is 16.385 TCF. Aminex’s share is 25%, which equates to 4.096 TCF net to Aminex.

All figures are mean unrisked GIIP. 4.096 / 0.1148 = 35.68.

So, after accounting for our reduced share of ownership, the current estimated size of asset that Aminex owns is more than 35 times larger than it was in the run up to the last drill.

Apologies once again for forgetting to include the calcs previously.