ZANZIBAR, OIL AND ‘THE UNION’

The danger of a border dispute similar to the north and south Sudan conflict emerging between Zanzibar and Tanzania Mainland looms large in the event of the isles striking oil or gas as autonomous East African islands. The likelihood of such a dispute is seen by  the ruling  Chama Cha Mapinduzi (CCM)  in Zanzibar, and calls for effort to avert the conflict.

It is common knowledge  that a struggle to control oil and gas presumed to be available in Zanzibar has exerted strains on Africa’s sole union  born in 1964, particularly since 1997 when the isles administration started blocking exploration decisions made in Dar es Salaam;  but this is the first admission by the ruling party oil and gas is the main reason the union between Tanganyila and Zanzibar is in danger.

The CCM Deputy Secretary General for Zanzibar,  Vuai Ali Vuai told the reporter Jaston Binala in an exclusive interview in his office that the survival of the Union was however very important for the safety and well being of both Zanzibar and Tanzania Mainland.

“It is true there is a resource control problem;  but  people are contemplating on how to solve this problem,”  the CCM Deputy Secretary General for Zanzibar said.  He was discussing the possibility of  the 1964 union between  Tanganyika  (Tanzania Mainland) and Zanzibar  breaking-up as a result of the on-going struggle to control  the oil, gas or both  deposits thought to be available in Zanzibar.

Two oil and gas exploration multinationals have shown interest to search for oil and gas in Zanzibar for a number of years. Licences had been issued by the union government Tanzania Petroleum Development Corporation (TPDC) to  Dutch Shell Exploration Corporation for a permit to prospect for  oil and gas on blocks 9, 10, 11, and 12 in the offshore deep sea areas east of  Pemba and  Unguja as  Antrim Resources of Calgary, Canada had been given the permit to prospect for oil and gas on the onshore blocks of Pemba and Unguja islands. This was true in 1997. The Zanzibar Revolutionary Government  nullified the licenses.

Officially no oil has been discovered in Zanzibar, but the islands have been awash with the hope oil reserves sit somewhere beneath the islands and the general consensus  is that  the use of this resource should be restricted to Zanzibar, excluding the mainland. But while the islanders  seem to all agree, unanimously,  that any oil  and gas found should be used to develop Zanzibar alone, they are divided on approaches to achieve that objective.

A  Spokesman for  Jumuia ya Maimam Zanzibar,Sheikh  Khamis Yusuf Khamis,  who also acts as the spokesman for the  politically charged religious organization   UAMSHO Zanzibar  said to achieve this objective Zanzibar must  be granted full political autonomy in the new constitution now under construction.

Vuai on the other hand,  who associates UAMSHO Zanzibar with the opposition political party Civic United Front (CUF)—claiming they are one thing and the same– agrees  with UAMSHO any  oil discovered should be used by Zanzibar  alone;  but  he disputes and disapproves the concept of  full political autonomy for the islands.  Full political autonomy  for Zanzibar would spell disintegration of the union between Tanganyika and Zanzibar, Vuai argued,–and nobody in their right mind wants to break-up the union.

Zanzibar needs the mainland, the mainland needs Zanzibar for security reasons, for economic reasons and for kinship factors.  Zanzibaris and mainlanders are too interwoven through their bloodlines to split them up.  Khamis Yusuf Khamis of UAMSHO Zanzibar said his grandmother on his mother’s side  is a mainlander from Tanga.  The  UAMSHO Zanzibar Secretary  for Western Zanzibar (Unguja Magharibi) is  Nassor Hamad Omar.  He said he is the grand son of Chief Mirambo in Tabora on the mainland and he is often called to attend family meetings.   Efforts to get a comment from CUF secretary General Maalim Seif Sharrif Hamad failed when this reporter  contacted him through his personal aide Ahmed Omar in Zanzibar.

“There are indications we have oil in Zanzibar, but this resource does not have to be a union matter.  There is gold on the mainland, it is not  a union matter. There are diamonds, Rubies, Tanzanites  on the mainland. They are not union matters, but the union is still intact. We can remove the Zanzibar oil from union matters and still maintain the union,” Vuai said. “But there is a problem; there are people who have made derogatory remarks against our friends on the mainland in  proposing that oil be removed from union matters.  It is these remarks which were not necessary which have complicated matters. It was possible to remove oil from union matters without insulting anyone. The Zanzibar Second Vice President was called Tanganyika’s resident ambassador here at one time, and our youth wing responded by insulting Maalim Seif Sharrif Hamad.”

“We entered the Union in 1964, and the union articles did not have oil on them. The Union was stable without oil  back then, it can be stable without oil now.  The trouble has been the language we have used to express our desire to remove oil from union matters.  And the derogatory statements were made by people in both our parties CCM and CUF, “ the CCM deputy Secretary General for Zanzibar said.

The picture coming out of the tension that now exists between Zanzibar and mainland Tanzania is that Zanzibaris are rejecting the union in order to keep the oil thought to be in Zanzibar for themselves, but this is not true. It is possible to remove oil from union matters and still maintain the union, Vuai argued.  Breaking up the union would devastate Zanzibar economically as well  as in security terms, although  mainlanders should also  understand Zanzibar is a useful partner in security terms.

Breaking the union has negative implications for both Zanzibar and the mainland, Vuai said.  The right  thing to do is to resolve this oil problem amicably. It is possible to remove oil from union matters without demanding full autonomy by use of  legal mechanisms that guarantee agreed levels of resource use for Zanzibaris.

An autonomous Zanzibar will  call for demarcations of  borders whose co-ordinates are already known, he said.  That is bound to lead the two territories into confrontation similar to the confrontation  between north and south  Sudan. “I do not think that is what we want to do,” the CCM Deputy Secretary General said.  It was therefore important that Tanzania makes  effort to avert the duplication of  the north and south Sudan oil dispute here.   Border demarcations  would markedly reduce Mainland Tanzania’s  Economic Zone on the Indian ocean, turning  vast areas of gas fields in the ocean into Zanzibar territory. The term ‘autonomy’ therefore carries with it  a serious threat to ignite a resource war between the two territories.

A proper, mutually agreed,  resource utilization  policy should  be made to clearly state how resources will be used in the two parts of the  united republic, even as  each part uses the resources for their own development, he said. And this should be in agreement with  the new constitution of  the united republic of Tanzania now under construction.

The second draft constitution has made oil and gas a non union matter. There are only seven union matters, and oil,  as well as gas, are not on the list. The draft constitution provides for people living in a resource area in the United Republic to decided on the proper use of a resource in their area, implying that the new constitution, if adopted in the proposed form, would  give Zanzibaris freedom to use their oil or gas in the way that they choose.

Vuai speaks about this conflict using the future tense as if it is waiting to happen;  but the oil and gas conflict between Zanzibar and mainland Tanzania exists already, in the present tense. It has been lurking in the corridors of power between the two sides since 1964, flaring up in  1997 when the Zanzibar Government  banned the Canadian oil prospector Antrim Resources of Calgary from conducting any oil search in Zanzibar, annulling the oil prospecting license issued in Dar es Salaam by the union government TPDC. Antrim Resources was licensed to search for oil and gas on both Pemba and Unguja islands.

In the year 2002, the Zanzibar government slapped another ban against the Dutch oil prospector, Shell Exploration Corporation which had been granted a prospecting license by TPDC  to search for oil and gas on four deep sea  blocks east of Zanzibar.  Why was Zanzibar blocking TPDC licenses? They blocked the licenses because they were convinced crude oil would be found on the isles quicker than on mainland Tanzania, and they wanted this resource to be controlled by the isles,  according to a research report prepared by the Norwegian Aid Agency.

Sheikh Khamis Yusuf Khamis explained why Zanzibaris do not want to share the oil with mainlanders,  if it is found: “Look here, this is like two families have formed a union. The other family has five cows and 40 people in it. I have one cow and two people in my family. It does not make sense to say let’s put these cows in the pool, slaughter them and divide up the meet. If we do that we’ll all get very tiny bits of meat per person. If I slaughter my one cow, I get half a cow. Do you see my point? (ushanifahamu?) ” the UAMSHO spokesmans said. “No one here in Zanzibar is against the union. We all want the union, but let us unite on all the other things but everyone should control their own resources.  We could unite on matters of the military like  the Europeans are doing through NATO. They are united but everybody controls their resources.”

From 1952, when exploration activities begun on Tanganyika and Zanzibar, the territory now called Tanzania,  42 wells have been drilled and the 43rd one is being drilled a baseline study of the oil and gas sector in Tanzania by the Norwegian Aid Agency reports. But no petroleum discovery has been made except for natural gas reserves at Songosongo and Mnazi Bay in southern Tanzania which are already in production and the more recent discoveries  of over 40 trillion cubic feet (tcf) of natural gas on offshore south eastern Tanzania near the border with Mozambique.   There are however  positive signs from Morogoro region, where the oil exploration company Swala Oil and Gas Exploration company says it has identified a potential oil field in the Kilombero basin at the potential oil field called Kito. The company said in  a statement quoted in the Tanzania local media that seismic data has indicated there may be an oil reserve in the Kilombero basin.

“The Kito prospect was identified from the results of the recently-completed seismic survey that Swala and its joint venture partner, Otto Energy (Tanzania) Pty Ltd (‘Otto’) carried out over a 20 km section of the 80 km-long Kilombero Basin,” the Swala Chief Executive Officer, Dr David Ridge said. Initial results also suggest the presence of  thick sediments of about 25 million years. The age of the sediments appears to be similar to that of sediments observed in the now proven oil basins of Lokichar (Kenya) and Lake Albert (Uganda), where Africa Oil and Tullow Oil have had significant success.

Over 2 billion barrels of oil have been found in the Lake Albert area of Uganda, in the western branch of the East African Rift System (EARS). Recently oil was also found in the Lokichar Basin in Kenya on the western branch of the EARS. The discoveries have provided compelling evidence that the presence of oil in the rift systems is geographically more extensive than previously thought. Swala, in September 2013,  announced that it would be selling its shares at 500/- each after listing on the Dar es Salaam Stock Exchange (DSE) on the Enterprise Growth Market(EGM) window. The company is determined to list on the Dar Bourse by early 2014, becoming the first oil company in the country to list on the bourse.

In Zanzibar, the petroleum exploration blocks’ distribution stands at 4 offshore blocks east of  Zanzibar in the Indian ocean, in addition to ‘on-shore’ exploration blocks on the islands themselves. The Zanzibar blocks are almost 20% of the available oil exploration blocks in the united republic.  The rest of the available oil and gas exploration blocks in the country are on the mainland.

Zanzibar’s excitement is based on oil seeps seen along the Isles’ belt  bringing hope  crude oil might be found earlier in Zanzibar than would be the case on  mainland Tanzania.   In the wake of these positive indications, oil companies including Maurel & Prom and Atrim Resources, initially licensed by TPDC (the parastatal wholly owned by the union government),  moved into Zanzibar to carry out the oil and gas exploration, but they were blocked by the Revolutionary Government of  Zanzibar on grounds that a new oil revenue sharing mechanism be in place prior to any further explorations.

The Zanzibar government was discontented with Production Sharing Agreements (PSA) mechanisms under TPDC and wished to negotiate  its own terms through its own Directorate of Petroleum unilaterally formed to oversee the petroleum sector in Zanzibar. In the dispute that followed, an international consultant was appointed to resolve the impasse.

The consultant revealed that the geological features of the Pemba and Zanzibar coast, particularly its low water depth, could prove that the assumed oil reserves were of less significance than the oil seeps existing along the belt. The consultant recommended that if reserves were to be found anywhere in Tanzania, the revenue sharing mechanism be such that 60% be retained by the developer and the remaining 40% to the Republic.

The consultant was received with  misgivings in Zanzibar, where it is widely held oil is present somewhere underground. I found out  Zanzibaris strongly believe  the  Tundauwa area on the western central  shoreline of Pemba  island and  the western  northern shoreline of  the same island  around  the villages of  Gando, Mkia wa Ng’ombe and the small Island of Njao do have oil reserves.  Shell Exploration has already signed an oil and gas exploration agreement with the Zanzibar government. No announcement has been made concerning any re-negotiations with the other exploration companies which had an interest in the Zanzibar blocks, which are Maurel & Prom and Atrim Resources of Calgary. But there is a new comer.

The isles’ Minister  for Land, Settlement, Water and Energy in the Zanzibar Government, Mr Ramadhan Abdullah Shaaban recently told the Government owned Daily News that  the Revolutionary Government of Zanzibar has signed a Memorandum of Understanding (MoU) with Shell Company of Netherlands, aimed at developing the oil and gas sector in the Isles, and that the Shell MoU was  signed  in the Netherlands after signing another MoU with RAK Gas from United Arab Emirates (UAE).  He made this statement at a meeting organised by RAK Gas (Oil and Gas Company) to brief members of the Zanzibar House of Representatives on how Ras Al Khaimah Company operates worldwide,  and to explain how Zanzibar would benefit if the company is given the chance to develop Oil and gas in Zanzibar. A similar seminar to the Zanzibar law makers was organised by Shell two months earlier.  Minister Ramadhani and  Shell officials signed the MoU when President Ali Mohamed Shein visited the Netherlands.  A Dubai-based website associates RAK Oil and Gas Company with the cement  producing company Ras Al Khaimah Cement Company established in 1995.

Oil seeps started being noticed in Zanzibar as far back as 1964,  according to the deputy local governments leader in the Tundauwa area (Naibu Sheha),   an elderly man named Dadi  Masoud Dadi. The oil seeps were noticed by villagers who suspected this  was crude oil and informed the main Zanzibar government through offices  in Chake Chake, Pemba. An oil seep is a showing  of oil  on the ground surface after seeping  upward from underground.

TPDC geological maps show  rock formations in the Indian ocean on the Tanzania side to be the protruding type nick-named ‘traps.’  The entire Tanzania coastline is full of these traps, TPDC says.  Oil reserves are found beneath traps of this kind, a TPDC expert told this reporter. The availability of gas on the East African coast is also an indication crude oil could be available somewhere in the neighborhood because where there is gas oil is likely to be found.

“It is us who discovered this oil. We know there is oil here,” Dadi said  as we trekked through a thick bush on a path leading  to a small stream which empties its dirty  water into the Indian ocean at Tundauwa on the western side of  central Pemba.  This reporter witnessed  a film of  liquid similar to kerosene floating on top of  scanty water on the stream running through mangrove trees refusing to grow  above two meters because of  suspected  unfavorable  soil chemistry at the Tundauwa sea side. This is one of the locations  thought to contain  crude oil reserves in Pemba.

“Back in 1964, a number of us in the village noticed oil running in this area. We buried a large drum (pipa) in the ground to collect the free running oil from the stream and sent  samples from the drum to Chake,” Dadi said. “A company came to drill for oil some distance from this location  up on higher ground  in 1982 but they left saying they had not found oil.”

The test drilling was  done at Tundauwa when Tanzania intensified its oil search at the height of an economic depression following the war with Idd Amin. Oil seeps at the Gando-Njao and  Mkia wa Ng’ombe areas in northern Pemba have not been drill tested.  So officially, no oil has  been found on Pemba or Unguja islands yet.

In the meantime, all oil prospecting  companies which have ever operated in Tanzania  were required to sign  a confidentiality clause in their  contracts with the country through TPDC.   The confidentiality clause is contained  on section  14, subsections (II), (III) and (V) of the Production Sharing Agreements (PSAs). Under this confidentiality agreement, all oil prospecting corporations are supposed to hide  statistics and every important detail about  oil search outcomes, and that no announcement about  oil may be made until the time is right for making such an announcement, and until both parties (government and corporation) have agreed the  time is right to announce the drilling results.

One section of the agreement  says  copies of all reports, explanations and statistics concerning oil prospecting in Tanzania must be submitted to TPDC…. The Government will sanction every  report being  issued by any company on what is viewed as the correct interpretation of drilling results.   The official version remains that no oil has been discovered anywhere on the United Republic of Tanzania.

Oil prospecting companies operating in Tanzania which are signatories to this secrecy code have  included  Dublin Petroleum International Ltd from the United Kingdom (Tanganyika Oil Company), CANOP Tanzania Corporation from Canada,  Gulf Western Union Ltd from Cyprus, Antrim Resources of Calgary, Canada and Ndovu Resources  from Australia. A new comer has included Afren East Africa Exploration which has been conducting  oil surveys in Tanga region for the last three years, and which  has finally decided to start test drilling for oil there now.

Dublin Petroleum International Ltd announced in 1996 it had seen what looked like a huge oil reserve  at Mandawa area in Lindi region, containing  an approximated 3  to 6 billion burrels of oil–which could have put Tanzania on the same footing as  the crude-oil-rich Arab nations;  but it was later reported this had been a force alarm. There was some oil in the area but the volumes were uneconomic.  Further explanation indicated what had been found in Lindi was a trace of oil, indicating the reserve had ‘migrated’ to some place else.  Crude oil reserves do migrate from one location to another, according to a Ministry of Energy and Minerals official who talked to this reporter on condition of anonymity. The official statement  from the Ministry of Energy and Minerals on the Mandawa concession thus became that “Tanzania has NOT  discovered oil at Mandawa, but we have discovered natural gas at Songosongo and Mnazi bay.”

Talking to journalists recently, the Permanent Secretary in the Ministry of Energy and Minerals,  Eliakim Maswi said  at the moment drilling and testing  technologies for presence of hydrocarbons have improved a great deal. What was true in the past may be false now. That is why  the place at Songo Songo where an Indian company decided  natural gas was not present in sufficient  quantities in 1974 is the same place now producing  the natural gas running electricity turbines at Ubungo, Dar es salaam.  Modern technology has  enabled  the drilling to go further down in the ground to discover  more gas was present at SongoSongo. In terms of oil and gas prospecting , Maswi said, a prospector  can strike a reserve  by simply drilling at a different location in the neighborhood of a dry well, or by going further down, although that costs money.

Tundauwa and Gando villages in northern Pemba are widely believed to harbour oil reserves in Zanzibar. The area however remains covered  in clove plantations, cassava fields and coconut trees. A clear day reveals a blue Indian ocean in the neeighborhod littered with floating canoes,  dhows  and little boys learning to fish. The dry well at Tundauwa is in the middle of a cassava field.  The cement  plastered top of the well is now used  for drying  cloves. There is no oil in Pemba at the moment—officially.

However, the map produced by Tanzania Petroleum Development Corporation (TPDC) to attract multi-national oil prospecting corporations into the country  shows oil seeps (oil shows) in four  locations dotted around Tanzania, an indication there is an oil reserve somewhere in Tanzania.  Oil seeps have been noticed  at Msimbati area in Mtwara region, Wingayongo  area  south-west of  Dar es salaam, the northern tip of Lake Tanganyika and on the island of Pemba in Zanzibar. Oil seeps may result  from spillage of oil from oil tankers plying the oceans, but if an oil seep is found on the mainland,  where there are no oil tankers, that is a strong indication an oil reserve  exists somewhere in the neighborhood, according to a geologist at TPDC, Dr. Nico Mliga.

In 2009,  President Jakaya Kikwete said since no oil has been discovered in the country, there was no point in arguing about distribution of revenues.  When President Kikwete made the remarks in 2009,  there were 20  corporations holding  Production Sharing Agreements (PSAs) in Tanzania , including two in Zanzibar where they could not start operations because there was still a stand-off between TPDC and the Zanzibar Government. The two petroleum firms with interests in  Unguja and Pemba were Antrim Resources (since 1997) and Shell Exploration Corp(since 2002).

The  corporations had stopped exploration activities  in Zanzibar due to the Zanzibar Revolutionary Government stand-off with the Union government which is still unresolved.  But researchers have said  Antrim Resources and Shell Exploration Corp.were both international petroleum exploration firms with wide experience in African politics and it can be argued that they will manage to balance and operate smoothly. Shell signed a Memorandum of Understanding with the Zanzibar Government during the last quarter of last year and its exploration activities are expected to take off in the islands.

“Soon, the [Zanzibar] government will allow companies to search and extract oil and gas for the interest of Zanzibaris. We need to be patient,”  the Minister for Land, Settlement, Water and Energy in the Zanzibar Government, Mr Ramadhan Abdullah Shaaban told the House of Representatives in  mid last year.  “We are now waiting for legal guidance from the committee formed to provide guidelines on how Zanzibar can enjoy full autonomy over its oil and gas resources,” he said.

The CCM Deputy Secretary General  for Zanzibar, Vuai Ali Vuai in conceding the union between Tanganyika and Zanzibar is passing through a rough patch on the road  because of  this struggle to control resources,  said it was important that the two sides of the union sit down to talk about this oil issue. The solution will be found in formulating a policy which provides an explanation for resource use  to benefit where the resource is found. And the best party to formulate that policy should be CCM because it has  the wisdom and expertise to do this, Vuai said. But the big problem is that derogatory remarks have been made and people are angry.  “It is very difficult to convince an angry person to go back to the table for talk about the same thing they are angry about.  But the solution to this problem  will be found in discussions to identify a policy area we could improve to provide an assurance resources will benefit the people where it is found, while this should also be made constitutional.”