Swala Oil and Gas PLC has made an agreement with agencies of the Tanzanian government to ensure it secures all permits to enable it start drilling next year.
The oil prospecting firm said yesterday in a statement that it had signed a memorandum of understanding with the Tanzania Petroleum Development Corporation (TPDC) and the Tanzania Wildlife Management Authority (Tawa) that "will ensure that the company receives, in a timely fashion, all necessary permits to drill the Kito-1 exploration well in 2019."
The news comes hardly a month after TPDC promised to engage Swala, following brewing tensions over alleged bureaucracy in the issuing of oil drilling permits for the Kilosa-Kilombero project.
Swala, which had planned to roll out the project in 2016 following promising seismic data said it had not secured permits.
In the previous statement, the firm also noted that it was disappointed and frustrated by the last-minute additional requirements by the government to assess whether or not using water from the Rufiji River Complex would have any impact on the Stiegler's Gorge Hydroelectric Project.
Recently, the Dar es Salaam Stock Exchange-listed Swala declared "force majeure" - a legal clause which removes liability from the company for not fulfilling a contractual obligation due to unforeseeable circumstances.
Swala said the force majeure shall be lifted once all permits were in place to allow the safe drilling at Kito-1 in 2019.
Kito-1 was assessed to potentially contain up to 185 million barrels of oil worth over $10 billion (over Sh22 trillion) at current prices.
But the drilling area is within a game-controlled area, which required a permit from the Tanzania Wildlife Authority (Tawa) as well.
The area is also said to be located some 200 kilometres from the Stiegler's Gorge Hydroelectric
Project, from which the government wants to generate 2,100 MW of electricity.