Orca Energy Group has warned that its subsidiary may cease operating Tanzania's Songo Songo gas field when its licence expires on October 10, 2026. The field supplies natural gas to power plants and industries and is operated by PanAfrican Energy Tanzania Limited (PAET), an indirect subsidiary of Orca. The company remains uncertain whether the proposed sale of its Tanzanian business to Taifa Gas Tanzania Limited and Amber Energy Investment L.L.C-FZ will be completed before the licence expires.
The proposed sale agreement was announced in April 2026, under which the buyers would acquire PAET through its Mauritian parent company, PAE PanAfrican Energy Corporation (PAEM). Taifa Gas would acquire 49% of PAEM, and Amber Energy Investment would acquire 51%. The sale is subject to several conditions, including Tanzanian competition and petroleum approvals, TSX Venture Exchange acceptance, and the release of Orca from guarantees relating to International Finance Corporation obligations.
PAET has notified customers, the Tanzania Petroleum Development Corporation (TPDC), and regulators that its Songo Songo development licence and certain gas supply contracts expire on October 10. The company outlined two possible outcomes: completion of the sale and continued operations under new ownership, or cessation of PAET's operation of the field and associated infrastructure after licence expiry, with transition activities coordinated with TPDC and regulators.
Orca shareholders approved the transaction on June 17, 2026. The parties had extended the deadline for satisfying the transaction conditions to August 31, 2026, allowing additional time for Tanzanian regulatory approvals. The extension provided a right to terminate within ten business days of that deadline, alongside an existing provision allowing any party to terminate the agreement at any time and for any reason.
The agreement provides a nominal cash price of USD 10 for PAEM's shares, alongside the purchasers' contractual obligations and the benefits to Orca of exiting the business. Orca's board attributed its decision to uncertainty over licence renewal, future financial commitments, contingent tax liabilities, and litigation costs. The board also noted that PAET's fixed operating assets would become TPDC property upon expiry or termination of the licence and production sharing agreement.
Songo Songo is a producing natural gas field located around Songo Songo Island, approximately 15 kilometres off Tanzania's coastline and 200 kilometres south of Dar es Salaam. PAET operates the field under a production sharing agreement with the Government of Tanzania and TPDC, producing gas for the domestic electricity and industrial markets. The project began delivering gas to Dar es Salaam in 2004, and the Ubungo power plant was connected to the pipeline in July 2004.
The field comprises eight wells, four offshore and four onshore, connected to the Songas processing plant and the National Natural Gas Infrastructure processing facility operated by GASCO, a TPDC subsidiary. Taifa Gas is a Tanzanian liquefied petroleum gas company whose activities include importation, storage, cylinder filling, distribution, and exports to neighbouring markets. Orca Chairman David Ross said the time was right for an orderly transition of the asset into its next phase, while Taifa Group Chairman Rostam Azizi said the acquisition would increase Tanzanian participation in the project.
Key points
- Orca Energy Group warns of possible end to operation of Tanzania's Songo Songo gas field on October 10, 2026.
- Proposed sale of Orca's Tanzanian business to Taifa Gas Tanzania Limited and Amber Energy Investment L.L.C-FZ awaits approvals.
- Songo Songo gas field supplies natural gas to power plants and industries, and its operation is crucial to Tanzania's energy sector.
