BOWLEVEN is expanding its African oil and gas empire into Tanzania in a deal worth up to $28 million (£18m).

The Edinburgh-based company said it has agreed to buy stakes in two licences in the East African country from Aminex to secure a low cost entry into the fast-expanding Tanzanian gas market.

The deal is the first agreed by Bowleven since the company completed a $250m stake sale in Cameroon in March.

This left the company with plenty of cash on its balance sheet at a time when oil and gas firms are grappling with the fallout from the slump in the crude price.

Last week Bowleven’s chief financial officer Kerry Crawford said the firm had been inundated with calls from investment bankers trying to sell it oil and gas assets as the downturn in the sector encourages deal activity.

Bowleven’s chief executive, Kevin Hart, said the deal with London-listed Aminex followed the extensive screening of a large number of opportunities in Africa.

“The deal affords Bowleven the opportunity to participate in highly attractive production and material appraisal/exploration assets without compromising its robust balance sheet and strong capital discipline,” said Mr Hart.

Bowleven expects the acquisition to provide it with access to cash generating production in the short term and potential exploration upside further out.

The company has agreed to acquire a 25 per cent interest in the Kilwani North gas field, on which production facilities have been installed. The field is expected to come onstream following completion of the adjacent Songo Songo gas processing plant. Bowleven said the plant is expected to be completed shortly.

The company could use the cash generated from production to fund activity in other areas.

Bowleven has interests in Cameroon, Kenya and Zambia but no producing assets.

The company has agreed to acquire a 50 per cent interest in the Ruvuma licence from Aminex. It said this offers the potential for near-term production following drilling planned for 2016, alongside the possibility of significant exploration upside.

Mr Hart said Bowleven looks forward to working closely with Aminex in order to finalise the proposed transaction.

Bowleven has agreed to pay $8.5m cash, $5m shares and to cover $10m of Aminex’s costs on the licences. It will pay up to a further $4.5m if targets are met.

The deal is subject to Bowleven completing due diligience, and to the approval of Aminex shareholders and the Tanzanian Government.