DAR ES SALAAM, June 17 (Reuters) - Tanzania will cap royalties for the production of oil and gas at 12.5 percent under the terms of a long-delayed petroleum bill expected to be passed by parliament within the next three weeks, a senior lawmaker said on Wednesday.
East Africa has become a new oil and gas frontier after a string of hydrocarbon discoveries, which producers hope to exploit to supply energy-hungry Asian markets.
Tanzania estimates it has more than 55 trillion cubic feet of natural gas but is yet to make any oil discoveries.
BG, Statoil (Xetra: 675213 - news) , Exxon Mobil (Swiss: XOM.SW - news) , Ophir and Petrobras are main players in Tanzania's oil and gas exploration activity and stand to be most affected by proposed new legislation.
"The government submitted the Petroleum Bill of 2015 to parliament yesterday and we expect it to be passed in the current parliament session," Richard Ndassa, chairman of the parliamentary energy and minerals committee told Reuters.
Analysts have said the development of the fast-growing petroleum industry was being held back by a lack of a legal and regulatory framework.
The 2015 Petroleum Bill seen by Reuters on Wednesday proposes a 12.5 percent royalty for oil and gas production in onshore or shelf areas and a 7.5 percent for offshore output.
The government's profit share from future oil production would range from a minimum of 50 to 70 percent depending on specific daily quantities of crude oil output in barrels.
The state's share of profit on natural gas production would range from a minimum of 60 to 85 percent, pegged on specific daily gas output.
Companies would also be required to pay signature and production bonuses, but the bill did not specify the amount, saying it would be agreed under the terms of the contracts.
The bill also proposes ring-fencing the recoverable cost of exploration and development licences as well as the introduction of a petroleum fee to be charged on petroleum products.
It stipulates that oil and gas companies will be obliged to satisfy the domestic market in Tanzania from their proportional share of production.
The proposed legislation calls for the establishment of the Petroleum Upstream Regulatory (PURA) body to supervise and regulate upstream petroleum operations.
The state-run Tanzania Petroleum Development Corporation (TPDC) will undertake upstream, midstream and downstream operations and hold the government's participating interests in oil and natural gas agreements.
The government will also establish an Oil and Gas Revenues Fund to ensure transparency and accountability in collection, allocation, expenditure and management of oil and natural gas revenues, the bill said. (Reporting by Fumbuka Ng'wanakilala; editing by Drazen Jorgic and David Evans)