An Investor’s Guide to Tanzania downstream Petroleum Product Market

Most people do not understand how the total oil and gas supply chain real works.

The oil and gas industry is divided into three sub-sectors: upstream, midstream and downstream sub-sector of the oil and gas industry.

The upstream portion of the industry is involved in finding areas with oil and gas resources. They get oil and natural gas out of the ground. They are often called exploration and production companies.

Midstream part is involved in the transportation and storage of oil and natural gas from the area they found them to where it can be refined and processed. And downstream segment covers everything from distributing and marketing of the oil and gas-related products.

. Overview of Tanzania’s downstream Petroleum Product Market

Tanzania downstream petroleum products market focuses on three main activities: importation, storage transportation, wholesale and retail distribution of petroleum products such as liquefied petroleum gas (LPG), lubricants, diesel, petrol, and kerosene.

Diesel is the top consumed petroleum products in Tanzania, this is because many economic activities such as transportation rely on this fuel.

According to the Energy Water and Utilities Regulatory Authority (EWURA), the consumption of diesel has increased by 7% percent in 2018.

However, the consumption of kerosene and heavy oil fuel is decreasing due to the alternative source for power generation such as natural gas.

Here are three main activities involved in the downstream petroleum sub sectors.

                      1. Importation

Natural gas is abundant in Tanzania. But the country does not produce oil, so it is a net importer of all petroleum products for the servicing of the economy. It is important to keep in mind that the region is only importing petroleum products and not crude oil because there are no refinery activities since 1999.

Most of oil marketing companies import petroleum products via port facilities of Dar es salaam. A portion of petroleum products are distributed to the local market, and the rest is distributed to the neighboring countries such mainly, Rwanda, Burundi, DRC Congo, and Uganda.

                                             2. Storage 

The next activity in the Tanzanian downstream sector is storage.

The storage facilities of petroleum products are owned by both oil marketing companies (OMCs) and Tanzania International Petroleum reserves Limited(previously, Tanzania Italian Petroleum Reserves limited TIPER).

For security purposes the ownership of storage depots have left to the hand of few oil marketing companies(OMCs).Interested oil marketing companies access the storage facilities through a hospitality agreement with depot owners.

                        

                                  3 Transportation

Transportation involves moving petroleum products from one place to another.

While there a variety of modes of transporting petroleum products such as pipelines, railways, and oceans.

But the most widely used mode of transportation petroleum product in Tanzania is through road

Technically speaking, the road is the most unsafe way to transport petroleum products, Transporting petroleum products may involve illegal activities such as mixing of petroleum products,

                                          Marketing Channels

In downstream sub-sector, two ways are used to get petroleum products to end-user customers

 1. Wholesale Activities

It involves buying petroleum products and sell to end-users such as power generation plants, industrial customers and factories, government agencies and trucking companies

2.Retail Activities                      

It involves buying bulk petroleum products such as diesel, kerosene, LPG, and lubricants and sell to final consumers through petrol stations or private shops.

                                Regulatory Frameworks

The oil and gas industry is very regulatory. And the regulator of Tanzania’s downstream sector is Energy Water and Utilities Regulatory Authority (EWURA),

For example, oil marketing companies company interested to run wholesale business must acquire a wholesale license from EWURA

                          Major Players in Tanzania’s Downstream Sub- Sector

Multinational oil marketing companies are leading Tanzania’s downstream sub-sector

According to the Energy Water and Utilities Regulatory Authority (EWURA), Oil marketing companies with the largest petroleum sales market share in the period of July 2017 to June 2018 are Oryx Energies (15.5%), Puma (14.4%), GBP (13.3%), Total (8.5%), Camel Oil (5.8%) and Moil (5.3%)). These firms dominating 62.9% of the market. 

Final Words

I believe “performance matter” in the oil and gas industry, So I dedicated to helping people and organizations improve their performance by both increases their productivity, maintain their competitive advantage and enhance the business profitability and ultimately make a greater impact and greater contribution: To their co-workers. To their clients. And to the community