(Ecofin Agency) - Drilling operations on the Kito prospect in the Kilosa-Kilombero licence in Tanzania which were initially scheduled for Q3 of 2016, are currently in doubts due to disputes amongst partners on the project.

The operator of the prospect, Swala Energy, in March announced that all measures have been put in place for drilling activities to begin on the licence in Q3 of 2016 with the recent feasibility study confirming that most of the roads and bridges in the country are suitable to transport a rig.

Disputes have been ongoing between Otto Energy and Swala due to a lot of issues including, failure by Swala Oil and Gas (Tanzania) plc (SOGTP) to pay cash calls and associated interest accrued under the Joint operating agreements (JOAs); claims by Otto Tanzania for payment of interest accruing under the JOAs as a result of SOGTP’s nonpayment, reaching about $360,000; as well as the removal of SOGTP as Operator of the Kilosa-Kilombero licence area following the company’s failure to prove to the joint venture partners that it is not bankrupt.

Drilling on the Kito-1 prospect was scheduled for September 2016 with the Drill Support Team contract for the 2016 drilling campaign awarded to the Tanzanian subsidiary of AWT International (Asia).

The joint venture partners on the licence include Swala Energy (operator), Otto Energy, Tata Petrodyne, and MV Upstream a joint venture between Vegas Oil & Gas Limited, (Vegas) and Motor Oil Hellas SA (MOH). All with 25% interests each, Oil News Kenya reports.

Anita Fatunji