Tanzania is placed on natural gas reserves projected at double Europe’s annual demand and its Energy Minister revealed that the country’s government wants future liquefied natural gas (LNG) terminals to be constructed onshore as a means to benefit the domestic economy, its energy minister said.
Tanzania and its southern neighbour, Mozambique, are competing in the race to be first to export gas from Africa’s eastern seaboard following recent massive discoveries offshore. These findings could transform their struggling economies, hence the competitiveness.
Both countries have challenges to deal with before they finish the race. Tanzania has yet to finalise its natural gas legislation, while debate continues regarding how much gas should be sold to foreign investors and how much left for domestic consumption in a country historically dogged by power outages.
Britain’s BG Group and Ophir Energy have been at the head of exploration in Tanzania, while energy majors Exxon Mobil and Statoil have also found gas. BG and Statoil plan to build a $10-billion LNG terminal.
Sospeter Muhongo, Tanzania’s energy and minerals minister, told Reuters on Friday in an interview that no LNG plant will be built offshore and such offerings have been rejected He further added that Statoil and BG were expected to submit proposals for a plant soon.
Natural gas is the fastest-growing fossil fuel and the region’s proximity to Asia’s major LNG consumers makes its reserves attractive to energy majors. Tanzanians have been farming since independence, but remain poor. We want the gas economy to benefit all Tanzanians,” the minister said.
Like Mozambique, Tanzania needs to conquer challenges before exports start, including passing legislation to promote and safeguard investors, securing new investment for costly infrastructure and allaying corruption fears. Tanzania, which is drafting a new gas policy, aims to hold its next oil and gas licensing around October 25 2-13. It will offer seven deepwater offshore blocks and one onshore. The gas policy will be taken for cabinet approval soon and the second that is done, a bill will be put to parliament. There has been no timeframe disclosed as to when the first LNG exports will take place.
The Tanzanian government will be keen to show gas windfalls will benefit the whole nation after violent protests in the south earlier this year by residents opposing the construction of a gas pipeline until they get a bigger share of benefits.
The southern Mtwara region, where the demonstrations took place, is one area earmarked by the government as a potential site for LNG plants. The government has accused opponents of fomenting trouble and has promised transparency.