Tag Archive for: Natural gas in Tanzania

Youth Employment Gap In Oil and Gas

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No longer debatable!

The tremendous natural gas discovered off coast Tanzania has been set the nation into international energy map.

Tanzania is considered to be sitting on one of the greatest gas reserves in the entire globe.

But still there is substantial gap between the growth rate of the sector and percentage of youngsters career in the market.

Don’t believe me?

Don’t fear you will confess it.

To understand what I am discussing about let me show you the sector submission of youngsters employment

According to URT (2013), most youths ages 15-24 years (24.0%) were employed in
manufacturing market followed by the general and retail store business (17.6%) of complete youths in the official market. Education utilizes about 15.2% of all youths in Tanzania while exploration and quarrying; and power and gas sectors implement the smallest share in the official market in Tanzania (0%).

Also Read:The greatest effort of Statoil to serve Tanzanian Youth

However, Youth participation in gas market is crucial for financial development because they are our upcoming.And their concepts are still effervescent and are more dynamic than the mature. Unfortunately,are the one face high unemployment

Gap can be narrowed
However, this gap can be simplified by participating between public and private market.Through doing the following

Creating attention to Tanzanian youth
The tough truth about oil and gas market is this, In real-world oil and gas industry hire small fractions of employees because of the investment characteristics of the market.

We should handle youngsters anticipations on the market. By doing so, Youth will begin to think on seeking self-employment through business actions in oil and gas industry

To let you know let me give you an example

Have you ever observed about Statoil company? Right?

Despite of its popularity and working in more 36 nations across the entire globe and 40 years of experience in the oil area. Statoil has roughly 23,000 genuine employees around the globe.

Introducing various business intervention
Also, this gap can be simplified through presenting of various business participation to motivate Tanzanian youngsters to implement possibilities increasing in oil and gas sector, instead of expecting someone will seek the services of them in the market.

We should get them trained, coached and mentored to create abilities for success business owners like discussion abilities etc

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My Last words
The best ways of reducing youngsters gap in Tanzanian oil and gas market is to change youth’s attitude and start thinking of fixing group issue in oil and gas market while making money.Get them trained and access financial. This could improve creativeness and advancement among Tanzanian youngsters and would turn resources into financial growth

      Hussein Boffu

                      Recent Graduate in Petroleum  Geoscience                                  

                                                                                 Hussein.Boffu@Tanzaniapetroleum.com

 0655 37 65 43

2 Tanzanian Boom towns for Oil and Gas Investment

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Are you seeking where to invest in Tanzanian oil and gas sector?

Do you wonder which town is best to invest in Tanzanian oil and gas sector?
Don’t worries
What if I told you some Tanzanian towns are booming thanks to natural gas discovery?

And these gas discoveries make some towns in Tanzania offering enormous investment opportunities to make health payoff

If you’re looking where to invest for the next coming month or year in Tanzanian oil and gas sector here are 2 hotspots for investment that I would explain

1:Mtwara
Is rapidly becoming hub region for business with increasing population marketplace.

The immense discovery of natural gas offers huge potential rewards.And many foreign investors has been attracted to the region.

Ever ask yourself why African billionaire Dangote choose to invest in Mtwara.The logic simple. He has already eyeing opportunities in the region.

With Mtwara port plus good infrastructure and logistics, Mtwara is the hottest spot for establishing vocational training institutions, recruiting agency recruiting agency because there many clients in the area.

However, Mtwara is the better place for building training institution related to oil and gas.

Like vocational training institution to help get local technicians which are in the dire demand in oil and gas sector.

Read also Lubricants Oil A booming business opportunities in Tanzanian Oil and gas sector

2:Lindi
With little gas production in Songo songo field since 2004, plus plan to build the Liquefied natural gas plant (LNG) in the area on the horizon, would make Lindi potential market for business.

Because people should travel in this area. There would be significant demand in real estate, hotels and transportation

Final Words
In the last decades, Mtwara and Lindi have appeared as sleeping regions. But the discovery of natural gas has been transforming the regions in the hub town for investment In the country.

Where to Get Capital For Oil and Gas Business In Tanzania

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Are you start up seeking money to start oil and gas business in Tanzania?

Do you want to venture into oil and gas business but you don’t have enough capital. ?

Do you have brilliant oil and gas business idea but you don’t have money to turn your idea into lucrative business in Tanzanian oil and gas industry?

What if I told you there smart ways to get capital and start doing multi-dollar business in Tanzanian oil and gas sector? And it’s all down this

When you think beyond and above there is money to everyone to venture in Tanzanian oil and gas business

The problem?

The best part of us never know the ways to raise our initial capital for oil and gas business.

But Unless you spend time in the right website(Including Tanzaniapetroleum.com) you will never uncover these secrets

Okay let’s face them

Saving that you have from salaries and wages
If you are an employee, in particular, company.

I have three words for you “YOU ARE LUCKY” Guess why? Because it’s pretty simple for you to raise your capital and venture into oil and gas business.

Save small percent of your salary until you reach the amount you comfortable to start oil and gas business.

Don’t make it hard than necessary!
, start small, Save small
Save 10 percent of what you receive each month
Let’s take you have a salary of 500,000 Tsh a month as a case study. When you save 10 % of you will have 50,000 Tsh each month. In a year, you earn
50,0000 *12 = 600,000.

 Friends and Family
Family and friends are the best way to raise your capital. Why ? because they trust you, they know your abilities and goals.And then is pretty simple to help raise money for oil and gas business

Form partnership
To have great ideas is not all takes to run successful oil and gas business.Why? Because oil and gas business need resources and capital.

But if you find a partner to pool money and resources into your business ideas, you will run successful oil and gas business.

And good news about the partnership is you share risk as well as profit.

Also Read:  How to start Oil and gas business in Tanzania with zero capital

  Investors
Who is the investor? The investor is anyone from individuals to private organizations who invest money in the business to gain interest.
Lots people outside there have free money and they keen to invest on people with great business ideas.

However, they will never invest on you unless you give them detailed information on what exactly is your business

Before you approach investor for capital you should be able to answer the following questions
1.What makes you business unique from others in oil and gas industry
2.What will make it successful
3. How much he will invest on you and how much he will  get back

Thing to remember

Investors always want to be confident that what he invest could end up with a great return.

 Sell assets
If you’re seeking money to start oil and gas business considering selling assets.

Some people own assets that they can survive without.Do you own extra cars? Consider to sell some of them and start oil and gas business

The worst part?
Selling assets seem to be weakening most of us? You know the reasons? It’s because we have an emotional attachment to them.However is the smart way to raise capital as we use the as security for bank

Grants and loans
Most international agency and government agency provide loans and grants to small biz or sturt up.

You know why they always help small start-ups? Because small biz and entrepreneurs are the ones who increase employment opportunities in the country.introduce new technology in the country that lead economic growth.

Still capital Hold you back to start a business in Tanzanian oil and gas business?

You already realize some ways to raise money to start oil and gas business
You don’t have excuse to start doing business in Tanzanian oil and gas industry
Use at least one of them to raise capital

Tanzania Settles On LNG Facility Location

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Tanzania will build its LNG facility in Lindi with the Tanzania

Petroleum Development Corporation having acquired the title deed for a 2,071Ha parcel of land.

According to TPDC the land location was reached in agreement with international oil companies with interest on the project all of whom have discovered gas reserves off the Indian Ocean coast.

Read:The Ultimate Guide To Participate In Tanzanian Oil and Gas Industry

“Once the project is complete it will enable the production of natural gas  for internal use as well as for export generating much needed foreign exchange,” TPDC said in a statement.

The government has also set aside another 17,000Ha in surrounding areas for development of industrial parks that will purchase the gas from the facility.

The Tanzanian government hasin the past said it plans to spend $6 million in the fiscal year 2015/16 of acquire land for the construction of a liquefied natural gas terminal with the entire project expected to cost over $30 billion.

Lindi is favored as it is close to an offshore deep-sea region where various companies including BG Group, Statoil, ExxonMobil and Ophir Energy have discovered over 50Tcf of natural gas.

A Memorandum of Understanding (MoU) between the government of Tanzania, the partners in Blocks 1, 3 and 4 and the partners in Block 2 signed in April 2014 covering the site selected for the LNG plant in Lindi.

Tanzania has to date discovered in excess of 50Tcf in the Indian Ocean

Read  alsoMultiple Ways To Invest In Tanzanian Oil and Gas Industry

Oil firm wants Tanzania favours

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The government has been asked to consider reviewing the current Production Sharing Agreement (PSA) system to make exploration and related activities within awarded licences more realistic.

The government has been asked to consider reviewing the current Production Sharing Agreement (PSA) system to make exploration and related activities within awarded licences more realistic.

“We understand that the nation needs tax revenues, but I think it is counterproductive to tax operations if by taxing them, they are delayed or made more expensive.Tthe returns from operations will dwarf any revenues that the country may make from the current tax regime and it is that we should be encouraging,” Dr. David Ridge, the Chief Executive Officer of Swala Oil and Gas

Favourable changes to the PSA format can help sustain development and production activities.

Also Read:how-much-do-Tanzanians-know-about-natural-gas

Dr. Ridge advised the government to be sensitive to the difficulties faced by the exploration and production companies.

Dr Ridge said although the oil and gas sector has had a steady growth over the years, the sector had already spent a fortune in the exploration and therefore, needs some consideration especially in the payment of taxes more so for those companies that have not yet made any discoveries.

“The oil industry has so far invested over $1 billion in exploring for oil and gas in Tanzania and not made anything like that in return,” he said.  A subsidiary, Swala Oil Tanzania, is presently exploring for crude on the mainland. Swala has a 50% equity in, and is operator of the Kilosa-Kilombero and Pangani licences.

He said that though he fully supported the government’s desire to encourage more investors into all sectors of the Tanzanian economy, there were already investors entrenched in the country like Swala ‘who should be looked after’ if others were to follow.

Dr Ridge said as a company listed on the Tanzanian Stock Exchange with a Tanzanian DNA, Swala desired to be treated as such over and above other ‘foreign’ companies.

The CEO also cited little or no corresponding dissemination of information about the role of oil and gas exploration companies to the public as a recipe for un-called-for public suspicions that is directed at the investors.

He said $20 billion is needed before companies can realize any commercial gains from their licenses.

He asked the government and the Tanzania Petroleum Development Authority (TPDC) to ease documentation and expedite processes, citing the current delays and the attendant red tape as the worst nightmare for the investors.

Swala is an affiliated company to Swala Energy Limited, a company in turn listed on the Australian Stock Exchange (ASX) .

Swala holds assets in the world-class East African Rift System with a total net land package in excess of 17,500 square kilometres.

New discoveries have been announced by the industry in a number of licences along this trend, including Ngamia and Twiga, which extend the multi-billion barrel Albert Graben play developed by Tullow Oil into the eastern arm of the rift.

Low Oil prices is Bad and Good for Tanzanians

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Since falling of oil price in June 2014, Tanzanians have been losers and winners as wells. Oil slump might be a bad news for Tanzanians but is a great to them also.
Articles discusses different consequences of low crude prices to Tanzanian citizens
Let’s face them
Why low crude prices is good for Tanzanians
Import expenses
Trust me or not a lot of Tanzanians are living happily with this crude low price as they use a car with cheap gasoline.This is because import expenses of processed oil product like diesel gasoline kerosene have decreased thanks to low oil prices Tanzania has no recent crude oil discovery. It depends on oil finished products imports.So low oil prices mean benefit to Tanzanians oil consumers

Minimize living cost of Tanzanians

Decline of oil prices means low transportation costs, cheaper food products as a result of lower living costs for an average Tanzanians
Why crude prices is bad for Tanzanians
On another hand, we are losers and victims of these low oil prices level due to the following reasons
Career in Tanzania oil and gas
Low crude prices are bad news for contemporary Tanzanian graduates who pursue careers in the oil and gas industry.In recent years petroleum engineering, petroleum geoscience, petroleum geology courses were seem as the ticket for the direct jobs to the Tanzania oil and gas companies.

However due to crude oil below $ 50 per barrel, these courses perceived as the ticket for unemployment offices

Read:who-will-hire-Tanzanian-graduates-in-oil-and-natural-gas-industry-now

Layoffs(Tanzania oil and gas professionals)
Many Tanzanians oil and gas workers have been lost jobs. I think the layoff will increase if low crude prices prolonged

Organizations
Low crude hurts Tanzania organizations that supply services to the oil and gas companies especially the upstream segment of the industry. Low crude price makes oil and gas companies do not buy anything from these organizations as they struggle to minimize expenses so as they can cope with low oil prices.

Read also :4-tips-for-local-organizations-to-sell-products-and-services-to-the-oil-and-gas-industry
Final Words
This continued low oil prices has both positive and negative impacts to Tanzanians Oil slump do not affect the country as compared to oil exporters like South Sudan that depends on revenue generated from oil.

Dear readers, we love to hear all of these from you

Oil production set to promote Tanzania

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Tanzania, with its oil seeps, seismic and other data shows strong hydrocarbon potential in its upstream oil industry sector. However, only 20 ‘wildcat’ exploration and eight development wells have been drilled so far in a 222,000 km2 area and therefore, the country could be classified as under-explored.

Also Read:2-reason-why-east-African-oil-and-gas-industry-could-change-global-energy-market

 It is therefore, telling that Dr David Mestres Ridge, the CEO of Swala Energy Tanzania noted in a key address to the company’s shareholders meeting held in Dar es Salaam recently that, “though Tanzania is currently poorly placed on the African and global map among the top oil and gas producers, the situation should change in a decade if the offshore gas is produced”.

The global oil production has tripled in 50 years with the biggest increase being in Europe and Eurasia and the Middle East. The bulk of oil production has been from the Middle East and the neighbouring countries, followed by North America and Europe and Eurasia (with most gas deposits and production being found in the Russian Federation).

The Middle East produces most oil but it’s third in gas production. Africa’s prospects, though comparatively mediocre in terms of oil/gas production, has been ably represented by Nigeria, Angola and Algeria but soon, as Dr Ridge noted, Tanzania might also stand out to be counted among the Africa’s greats in oil and gas production. Barely two decades ago, there was evidently little enthusiasm by oil exploration and production companies to venture into East Africa.

However, in recent years, there has been a new-found interest in the region’s oil sector-an interest that has sparked jostling for exploration ‘blocks’ by scores of potential investors in the industry. Among those investors is Swala Energy Tanzania, a locally-owned oil and gas company that has been listed on the Dar Es Salaam Stock Exchange (DSE). Swala’s current exploration blocks are in Pangani in the north-eastern coast of Tanzania and the Kilosa-Kilombero basin in Morogoro region, the latter of which the company will start drilling in 2016.

The attendant exploration activities have led to some new ‘finds’ within the region and has whetted further interest by oil companies to keep a keener eye in the region. Among the finds, Uganda leads the pack.

It recently discovered 4 billion barrels of oil, followed by Kenya with 600 million barrels, an admittedly sizable combined quantity in a region that had been neglected for a long time. Tanzania on the other hand, has held sway in gas production and boasts such vast deposits that, as Dr Ridge notes, “…if poured all over the country, they could cover the whole country to a height of 1.5 metres”!

Dr Ridge foresees a bright future for the oil sector in East Africa in general and in Tanzania in particular and the country could be a regional oil and gas powerhouse if the offshore gas is developed. The recurring unpredictably erratic oil prices have displayed a yellow light to the oil and gas companies, making the investment in the sector a potentially risk-prone undertaking.

The prices have been determined by overriding factors among which are: lower prices in North America due to abundance of shale gas, medium prices in Europe supplied mainly by gas from the Russian Federation and higher prices pushed by the Fukushima nuclear disaster in Japan a couple of years ago. The price slump climaxed between 2014 and 2015 with a drastic fall from over $120 per barrel to the current $ 50 per barrel.

“The implications of the collapse of the prices has meant less revenues from oil production and therefore, countries will have to tighten their belts while projects that were previously viable and competitive at lower prices will no longer be feasible,” says Dr Ridge. Though it might be cheaper to produce oil/gas in East Africa, Dr Ridge sees a major challenge in transportation to the market once the production starts.

This is because most of the closer markets are already being supplied by the existing producers for example Latin America is supplied by Bolivia, Nigeria supplies Europe, Brazil and Japan, Russia too send gas to Europe and it’s soon expanding to China and Japan. With the congested market, Dr Ridge sees East Africa’s option, as a late entrant to the fray, will have to send its commodity to Japan.

“It’s probably going to be cheaper to produce oil and gas in East Africa but its distance from the markets will mean more expensive transportation costs,” notes Dr Ridge and adds that besides the distance, there will still be competition particularly from Australia, Qatar and Russia.

Industry Insight: Is East Africa’s gas asset boom about to go bust?

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Recent oil and gas discoveries across East Africa, most notably in Mozambique and Tanzania, have seen the region emerge as a new player in the global oil and gas industry.

As exciting as the huge gas fields in East Africa are, the strong decline in oil prices and expectations for an L-shaped recovery with low prices over the coming years, are increasingly challenging the economic viability of the industry in this region.

The discoveries were expected to drive billions of dollars in annual investment to the region over the next decade.

Read:Interesting-business-opportunities-in-tanzania-oil-and-natural-gas-sectors-for-local-entrepreneurs

According to BMI estimates, the finds in the last few years are more than that of any other region in the world, and the discoveries are expected to continue for the next few years. However, falling global oil prices are threatening the commercial viability of many of these gas prospects.
Gas opportunity

The Indian Ocean, off the coast of Mozambique and Tanzania, is proving to be a rich hunting ground for natural gas exploration. According to US Geological Survey estimates, the combined gas reserves of Mozambique and Tanzania could be as high as 250 trillion cubic feet.

In Mozambique alone, proven gas reserves have increased dramatically from a mere 4.6 trillion cubic feet in 2013 to 98.8 trillion cubic feet as of mid-2015. Given continued offshore discoveries and the size of discoveries to date, continued growth in proven gas reserves is likely to continue into the foreseeable future.

New exploration on more frontier blocks, however, will likely be slowed as oil and gas prices fall and companies apply increasing caution to investing in frontier markets with nascent industries, poor infrastructure and long lead times.
Driving down prices

As liquefied natural gas (LNG) contracts remain heavily indexed to oil, the fall in global oil prices poses significant downside risk to gas production projects. Persistent oversupply in the oil market continues to put downward pressure on oil prices.

This trend of lower prices is unlikely to reverse in the near future with future prices estimating the average Brent crude oil price to range between $50-65/bbl over the next five years. Industry research estimates that an oil price of $70-80/bbl would be needed for the LNG gas projects just to break even.

Sustained lower oil prices are likely to take a heavy toll on the development of upstream gas production and downstream refining projects in the region, as pricing uncertainties affect the commercial viability of LNG projects, delaying investment in the region.

This will likely see companies hold off on Final Investment Decisions (FID) as they attempt to overhaul projects to cut costs and wait for more certainty on the direction of prices.

In Mozambique, for example, both Eni and Andarko have yet to reach a FID on their respective LNG projects. The lower price environment will likely force these companies to secure more off-take agreements before reaching FID.

Furthermore, it is unclear whether these projects would be economically viable at current pricing levels, and given expectations for a slow recovery in oil prices over the coming years, we could see further uncertainty and delays in reaching FID.
Evaluating strategy

The free fall of global oil prices is forcing companies to re-evaluate their growth strategy in the region. Anadarko CEO, Al Walker told investors that it is “unlikely that we will have the kind of margins that we have seen historically that would encourage us to go back into a growth mode.”

In Tanzania, the situation is just as precarious. Gas output will depend on construction of an LNG export terminal; however the project partners – BG Group, Ophir Energy, Statoil and ExxonMobil – have yet to reach FID, due to pricing uncertainties and a range of legal and regulatory hurdles.

Downstream refining projects are also in jeopardy. According to a Sasol report, Sasol, Eni and ENH have announced a partnership to look into a feasibility study for a large-scale gas-to-liquids (GTL) facility in Mozambique.

However, key to the progression of a GTL project in Mozambique will be the cost of the gas feedstock and the long-term outlook for oil prices. Central to GTL economics is the price spread between natural gas and oil.

On a positive note, both Mozambique and Tanzania are expected to experience positive gas consumption growth as their respective governments look to increase the use of natural gas in domestic power generation. However, as in the case of Nigeria, there is a risk that each government may fix domestic gas prices, which could hinder investment in the region. Interestingly, Nigeria recently raised local gas prices to stimulate investment and plug persistent local shortages.

prepared by  Adam Bennot is a private equity Analyst at RisCura, a global, independent financial analytics provider and investment consultant. He is responsible performing valuations of companies held by private equity funds and funds of funds in Africa.