Upstream Petroleum in Tanzania: TPDC Holds, the Contractor Operates

This page is the upstream petroleum rights operating file: what a company actually holds on a Tanzanian block, who signs it, and what the State takes off the top. It is no substitute for the block’s own agreement.

• Mineral classes on a different statute: copper and nickel battery metals
• Processing built beside the resource: copper concentrate and Dodoma
• Documentation at the extractive border: East Africa gold doré
• The duty that outlives the certificate: environmental audits after EIA

As at 14 September 2026. Confirm the live block map, the open round and every approval at pura.go.tz; this file rests on the Petroleum Act, 2015 and the regulations under it.

Two Acts, two regulators, and a block the Mining Commission does not own

Minerals and petroleum are separate statutory worlds here, and investors arriving from mining keep collapsing them. Solid minerals sit under the Mining Act, Cap. 123, administered by the Mining Commission. Crude oil, condensate and natural gas in their natural state sit under the Petroleum Act, 2015, where the mandate splits three ways: the Minister responsible for energy grants and revokes, the Petroleum Upstream Regulatory Authority regulates exploration and production, and TPDC carries the State’s commercial interest.

PURA’s remit stops at the processing boundary the agreement defines. Transmission pipelines, the tariff a shipper pays, distribution, retail and storage belong to EWURA. A prospecting licence carries no drilling right, and a mining licence over the same coordinates does not settle who may take the gas beneath it. Where the two meet on the ground, the instruments decide, not whoever pegged first.

Before the process: the stake a Tanzanian company must hold

Upstream work is not on the reserved list at GN No. 487A of 2025; the constraint on a foreign investor is local content, not ownership. Under Regulation 15(3) of the Petroleum (Local Content) Regulations, 2017, a non-indigenous company supplying goods or services to the industry must form a joint venture with an indigenous Tanzanian company, and that partner must hold at least 25% of the venture. The same Regulations define an indigenous company by Tanzanian citizen ownership, with a participating-share floor of 15% in the definitional limb: two thresholds doing different work, and a point for counsel.

Land is the second restriction. A non-citizen may not be granted a right of occupancy under the Land Act, Cap. 113 except as a derivative right for investment purposes, and village land under Cap. 114 must first become general land. Rig site, camp and flow-station each need that chain resolved first.

TPDC holds the title; the contractor earns a share of production

This is the sentence most pitch decks get wrong. Since the 2015 Act, exploration and development licences over Mainland acreage are granted to TPDC, the designated national oil company. The international party is a contractor, and what it owns is a bundle of entitlements under the production sharing agreement: a work obligation, recovery of approved costs from cost petroleum, a share of profit petroleum on an agreed split, and a carry of TPDC’s participating interest. Instruments granted under the repealed Petroleum (Exploration and Production) Act, 1980 run on their own savings terms.

Two 2017 statutes changed what the agreement may say. The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017 requires disputes over natural wealth to be adjudicated by bodies established in Tanzania under Tanzanian law, which is why a foreign-seat arbitration clause lifted from another jurisdiction does not survive review. Its companion on unconscionable terms lets the National Assembly reopen an arrangement. Price both at term sheet.

Zanzibar licenses its own acreage

The isles run upstream oil and gas on their own instrument, the Zanzibar Oil and Gas (Upstream) Act, 2016, with the Zanzibar Petroleum Regulatory Authority as regulator and the Zanzibar Petroleum Development Company as its state oil company. A PURA approval buys nothing in Unguja or Pemba, and the reverse holds.

The corporate and revenue overlay moves with it. A company working there registers at BPRA rather than BRELA; non-Union taxes are a ZRA matter while income tax and customs stay Union taxes collected by TRA. A group working both sides keeps two compliance calendars.

Licence, agreement and approval, side by side

Terms, renewal periods and relinquishment percentages differ between blocks and rounds. Take them from the executed agreement, never from a summary. This page included.

What the State takes before anyone books a profit

Royalty comes first and comes off production, not off profit: the Petroleum Act, 2015 sets 12.5% onshore and in shelf areas, 7.5% offshore. Then the agreement’s profit split, then TPDC’s participating share, then ordinary tax. Corporate income tax is 30% under the Income Tax Act, Cap. 332, which ring-fences each contract area so losses on a dry block do not shelter income from a producing one. Provisional tax falls due on the last day of the third, sixth, ninth and twelfth months.

Service fees paid to non-resident contractors attract 15% withholding under Cap. 332: the line that surprises drilling and seismic subcontractors with no registered presence. VAT is 18% under the VAT Act, Cap. 148, and relief for prescribed exploration supplies is claimed, not assumed. The council takes service levy at 0.3% of turnover under the Local Government Finance Act, Cap. 290. Sector revenue goes to the Oil and Gas Fund at the Bank of Tanzania under the Oil and Gas Revenues Management Act, 2015. Finance Acts move tax rows every July. Confirm the live schedule on tra.go.tz.

The sequence a block actually follows

1. Screen the acreage and the service lines: ask PURA which blocks are open, held, relinquished or under application, and test GN No. 487A of 2025 against any trading arm the group plans.
2. Take a Tanzanian corporate identity: a subsidiary under the Companies Act, Cap. 212, or a place of business registered under Part XII at BRELA.
3. Build the local-content structure before bidding: the venture, the partner’s stake, a scope of work that stands up, and the annual plan the regulator calls for.
4. Negotiate with TPDC under PURA’s supervision: work programme, cost-recovery ceiling, profit split, participating interest and the extent of the carry.
5. Clear Cabinet, then the House: the agreement goes to the Cabinet, then the arrangement is tabled for parliamentary review under the 2017 statute.
6. Resolve environment and land: a NEMC certificate under the Environmental Management Act, Cap. 191, then occupancy or a derivative right over the site.
7. Open the tax and reporting calendar: TIN, VAT registration, payroll registrations, the provisional-tax diary and the extractive-industries disclosure cycle.
8. File the development plan at declaration: decommissioning liability accrues from first production, not from the last year of field life.

The papers PURA and TPDC ask to see

Keep one pack and reuse it. The execution copy of the agreement with every amendment, and the Cabinet approval. The block map with coordinates and the current relinquishment position. The approved annual work programme and budget, against which cost recovery is tested. The development plan and its approval letter. The local content plan, the venture agreement and the share register proving the partner’s stake. The environmental certificate and the latest audit report. A BRELA or BPRA extract with beneficial ownership current, plus TIN and VAT certificates. Work permits under the Non-Citizens (Employment Regulation) Act, 2015 and residence permits under the Immigration Act, Cap. 54 for the crew list. Insurance, the decommissioning plan and the fund behind it.

Assignments deserve their own folder: the farm-in deed, the regulator’s consent, the tax treatment of the transfer, and the updated register. An unconsented assignment is not a private matter.

Illustrative arithmetic on one onshore year

Take an onshore development licence whose gas sales give a gross production value of TZS 48,000,000,000. Royalty at 12.5% is TZS 6,000,000,000. Had identical volumes come from an offshore block at 7.5%, it would be TZS 3,600,000,000: a gap of TZS 2,400,000,000 on the same molecules, decided by nothing but where the well sits. The council’s 0.3% levy on that turnover adds TZS 144,000,000. All three precede cost recovery, the profit split and corporate tax.

On the services side, a subcontract worth TZS 12,000,000,000 executed through a compliant venture puts TZS 3,000,000,000 with the Tanzanian partner at the 25% floor. Illustrative arithmetic, not a quotation.

Where this file stalls

• A farm-in negotiated in a data room and signed before the regulator saw the assignment, leaving the register showing a party that no longer funds the work
• A local content plan drafted the week of the audit, with a partner holding a nominal stake and no scope anyone can describe
• Seismic and drilling subcontractors invoicing from abroad, then meeting 15% withholding and a VAT position nobody modelled
• Mobilisation on an environmental certificate whose audit obligations were never opened
• Expatriate crew rotating in on business visas because the permit file was left to the last fortnight

Mandate-holders this file does not replace

PURA regulates upstream operations and approves the technical programme. TPDC is the title holder and the commercial counterparty, not a regulator. Grant, renewal and revocation belong to the energy Minister. EWURA owns midstream and downstream. NEMC owns the environmental certificate and the audit cycle behind it. TRA owns income tax, VAT and withholding; the council owns service levy; the Bank of Tanzania holds the sector fund. Lands owns occupancy, OSHA the workplace, and the Labour Commissioner and Immigration the permits.

What to confirm before you act

• The block’s current status and its relinquishment history, in writing, before any consideration moves
• Whether the interest you are buying into arises under the 2015 Act or a surviving 1980 instrument
• The royalty classification (onshore, shelf or offshore) against the Act as it now reads
• The venture’s stake against Regulation 15(3), tested on the share register rather than the term sheet
• The tax treatment of any assignment, and whether consent precedes or follows completion
• Whether the dispute clause stands against the 2017 sovereignty statute, on an advocate’s opinion