Songo Songo's Licence Clock Runs Out in Forty Days — With Three ICSID Claims Still Live

What happened

The Songo Songo gas field has supplied Tanzania's domestic power and industrial sectors for over two decades. In 2001, Tanzania granted the Songo Songo Development Licence to TPDC for an initial term of 25 years, expiring on 10 October 2026, with Orca Energy operating the field through its subsidiary PanAfrican Energy Tanzania Limited (PAET) since 2004. The project involves a 232-kilometre pipeline delivering gas to power plants and industrial users in Dar es Salaam, making it central to Tanzania's domestic energy system.

The breakdown began with the licence extension process. In April 2023, PAET formally requested that TPDC apply for an extension of the development licence. TPDC is contractually required to make that application upon request, but failed to do so in a timely manner. When it eventually submitted the application in late November 2024, it acted unilaterally — without consulting Orca's subsidiaries — and on terms Orca characterised as commercially unviable. Tanzania subsequently declined to engage in substantive dialogue on the terms. In parallel, TPDC continued to impose the Protected Gas pricing regime after its contractual expiry on 31 July 2024, and failed to pay royalties owed under the project agreements.

In August 2025, Orca filed three ICSID arbitration claims: one under the Mauritius–Tanzania Bilateral Investment Treaty through its Mauritian holding subsidiary PAEM, and two contractual claims by its Jersey-subsidiary PAET under the Production Sharing Agreement and Gas Agreement respectively. The combined dispute is valued by Orca at approximately USD 1.2 billion. By April 2026, with no licence extension resolved and contingent tax liabilities accumulating, Orca's board concluded the Tanzanian business had no material residual value. On 13 April 2026, Orca agreed to sell PAEM — the holding entity through which all Tanzanian rights are held — to Taifa Gas Tanzania Limited (49 percent) and UAE-registered Amber Energy Investment LLC-FZ (51 percent) for a nominal consideration of USD 10. The three ICSID proceedings were already on foot at the point of transfer, and Orca retains the right to pursue those claims post-closing.

A further layer of complexity arises from Swala Oil and Gas Tanzania Plc, currently in creditors' voluntary liquidation, which holds a USD 167 million LCIA claim against Orca and its subsidiaries running in parallel to the ICSID proceedings. The Taifa-Amber consortium therefore acquired a producing gas field burdened by multi-forum international litigation, an expiring licence with no publicly confirmed extension terms, and a contingent tax liability position whose scale Orca itself described as material. As of today, 31 August 2026, the development licence expires in 40 days.

Why it matters for dispute formation

The Songo Songo situation is structurally unusual because the arbitration claimant and the current operator are now different entities. Orca filed the ICSID claims as operator; it then divested the operational entity and the underlying asset for a nominal sum while retaining those claims. Tribunals will be required to assess whether the transfer affects standing, and more acutely, whether the damages valuation — currently pegged to Orca's USD 1.2 billion project estimate — still holds now that the same assets were sold for USD 10 in an arm's-length transaction. Tanzania may argue that the divestiture price is the most reliable indicator of fair market value, a line of reasoning that could substantially compress the quantum even if liability is established.

The licence expiry on 10 October 2026 is itself a dispute formation event of the first order. If no extension is agreed before that date, Tanzania and TPDC may assert that the entire contractual framework — the PSA, the Gas Agreement, and the obligations referenced in the BIT claim — lapses with the licence. That would trigger a new question: whether measures taken after licence expiry can nonetheless be attributed to the pre-existing course of conduct that the arbitration already covers. Orca's position appears to be that the failure to extend was itself a breach, meaning the licence lapse was caused by the respondents' conduct rather than by effluxion of time. Tribunals have accepted similar causal chains in analogous cases, but the argument remains contested.

For the Taifa-Amber consortium, successor-liability exposure is the live risk. The beneficial ownership of Amber Energy (51 percent of the operating entity) has not been publicly disclosed. If that ownership is in a jurisdiction with no investment treaty relationship with Tanzania, lenders financing any licence extension or capital programme will face a gap in political-risk coverage that neither export credit agencies nor commercial insurers can easily bridge. The opacity of the counterparty also raises compliance questions for offtakers and downstream buyers of Songo Songo gas — particularly those with supply-chain due diligence obligations under UK or EU frameworks.

For the broader East African gas sector, the structural lesson is sharp. A 25-year PSA whose extension mechanism was drafted in 2001 proved insufficient to manage the commercial and political pressures of a regime change environment. The dispute demonstrates how a failure to build mandatory, time-bound extension procedures with neutral arbitration escalators into long-dated gas agreements — rather than relying on state-entity compliance — leaves investors exposed to deliberate delay as a tool of renegotiation.

Who's exposed

What to watch

• Whether Tanzania and TPDC reach an extension agreement with the Taifa-Amber consortium before the 10 October 2026 licence expiry — and on what commercial terms — which will directly affect the quantum and admissibility arguments in the live ICSID proceedings.
• Disclosure of Amber Energy Investment LLC-FZ's beneficial ownership structure, which will determine whether any investment treaty protection covers the new operator and whether lenders can obtain MIGA or commercial political-risk cover for future capital expenditure.
• The outcome of the Swala Oil and Gas LCIA arbitration, which runs in parallel to the ICSID proceedings and attaches to the same corporate vehicle now held by Taifa-Amber — creating a potential priority dispute between two sets of international claimants over the same assets.
• Whether the ICSID tribunals accept Orca's argument that the USD 10 divestiture price reflects coerced exit value rather than fair market value, and how they resolve the tension between the nominal transfer price and a USD 1.2 billion damages claim.