developments appear to be on hold for now, our East Africa Politics & Security report points out that Tanzania still appears to have some ambitious plans for the country’s gas future.
With the slowing interest from oil companies, the Tanzania Petroleum Development Corporation (TPDC) appears to be taking the lead in the sector, but there are still issues which need to be resolved in the industry to help build confidence that the ambitions can be fulfilled.
TPDC has spoken of its extensive ambitions for the use of natural gas, serving domestic and regional markets, yet in the absence of any firm plans the ambitions do not create any greater certainty. Regionally,
Tanzania sees natural gas markets in most of its neighbouring countries. Addressing the Kenyan parliament on 6 October during an official visit, President Jakaya Kikwete said that Tanzania and Kenya are ‘discussing ways to extend the natural gas pipeline to Kenya’.
Speaking to the state daily newspaper Habari Leo the following week, TPDC’s Director of Gas Processing, Transport and Distribution, Wellington Hudson spoke of serving markets in the Democratic Republic of Congo, Rwanda, Burundi and Uganda, as well as Kenya.
He further told Habari Leo that an investor has agreed to finance a pipeline to Bagamoyo, to service tourist hotels, with the possibility of an extension to Tanga in the north, and Mwanza in the north-west.
The prospect of a natural gas pipeline running parallel to a crude oil export pipeline from Uganda is also enticing to TPDC, which confirmed to Habari Leo that it is in talks with Total to develop such a project. Exploiting Tanzania’s deep sea gas resources will depend on having a feasible Natural Gas Utilisation Master Plan (NGUMP) in place.
The document has been in preparation since at least 2011, with no sign of it being finalised soon. The NGUMP is critical to allow investors to make a final decision to invest on the LNG plant, as it will determine the domestic market obligation to be demanded by government.
Currently the Statoil Production Sharing Agreement stipulates that 10% be reserved for domestic use, a figure which is also likely to be found in the BG agreement. BG in particular has argued strongly over the past two years that realistic domestic needs can be served by onshore and near shore reserves. They also argue that the feasibility of the LNG plant will be strengthened if their domestic obligation is set at zero.