Jim Baban – VP International Business & Managing Director, Heritage Oil, Tanzania
Heritage Oil MD Jim Baban discusses his company’s onshore oil play in Tanzania; Heritage’s successful track record in East Africa; positive government relations; and the strategic and financial benefits of Heritage’s 2014 Qatari buyout.
2014 saw Heritage bought out by the Qatari-funded Energy Investments Global and an injection of around USD 1.3 billion into the company. What effect has this had on your global operations in general and, more specifically, in Tanzania?
Heritage Oil is targeting an oil play in Tanzania which would make us the first exploration company to discover oil in Tanzania.
Following the takeover Heritage Oil is now majority owned by a company controlled by His Excellency Sheikh Hamad Bin Jassim Bin Jabor Al Thani, a former Prime Minister of Qatar. This means that we have access to both his network of strategic relationships throughout the world and considerable financial resources. The strategy has evolved into building a diversified, international, and very substantial oil company.
Heritage typically focuses on regions which may have been overlooked and where it can participate as an early entrant. The company has also been successful in the quick buying and selling of exploration assets. With this in mind, what do you see as the long-term potential of Tanzania as an oil and gas producer and what role will Heritage play in this?
Heritage Oil is targeting an oil play in Tanzania which would make us the first exploration company to discover oil in Tanzania. Heritage Oil has a track record of success in East Africa; being the first company to explore in Uganda for more than 60 years and discover the prolific Albert Basin.
A lot has been made of the rivalry between Tanzania and Mozambique as emerging East African hydrocarbons players. Why did you choose to invest in Tanzania and not its neighbour?
The focus on Tanzania is mainly attributed to the similarity with our major discovery in Lake Albert, Uganda. Through our exploration programme we have established look-a-like potential oil bearing targets in Lake Rukwa
Heritage relinquished its stake in the North Rukwa basin in 2014 and is now focusing on the South Rukwa. Please give our readers an insight into why the company took this decision and what potential the South Rukwa basin holds.
After extensive fieldtrips and review of the seismic data; it was concluded that North Rukwa lacked the presence of oil bearing substructures and the prospectivity and potential source kitchen are in South Rukwa.
Many of the international companies operating in Tanzania have only partial stakes in projects but Heritage has a 100% interest and is the sole operator in both the South Rukwa and Kyela projects. What is the significance of this to your operations in the country?
Most of the international companies that own partial stakes are exploring offshore Tanzania and the expenditure commitment is much more significant and requires financial risk sharing. In general; onshore assets in Tanzania do not have same high costs magnitude as offshore acreage. Therefore, Heritage Oil is able to continue with 100% interest, albeit risk sharing is common throughout the industry and so Heritage Oil would consider bringing in a partner to its licences.
Under the Joint Venture obligation in the Tanzania Petroleum Act 2015, private companies must partner with the TPDC, Tanzania’s National Oil Company, on oil and gas projects. How would you characterise Heritage’s relationship with the Tanzanian government? Are they supportive of international investment in oil and gas in general?
Heritage Oil has excellent relationship with TPDC and MEM (Ministry of Energy and Minerals) and gets valuable support and understanding on a regular basis. The TPDC and MEM’s positions are greatly appreciated by the IOCs operating in Tanzania and we look forward to ongoing cooperation.
What effect do you see the new presidency of John Magufuli as having on Tanzanian oil and gas?
President Magufuli’s measures against corruption have been magnificent and his personal input to maximise the efficiency of all government institutions has been welcomed by international companies operating in Tanzania. He is certainly a role model for all Tanzanians.