A dive into Tanzania’s gigantic oil and gas ambition

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  • Tanzania plans to explore more natural gas reserves in F22/23
  • Only 30 per cent of the area has been explored for natural gas reserves
  • Uganda and Kenya are developing their oil and gas sectors swiftly

Oil and gas in Tanzania is the shining armour with the potential to draw trillions and expand the economy.

Tanzania has an ambition, and it is gigantic enough to levitate its global economy towards an oil and gas stage. The East African nation’s natural gas landscape is the new playing ground with the potential to transform the nation’s labour and industrial complex.

Natural gas in Tanzania is the new big deal. This form of energy isn’t only clean and safe, but it is a lucrative business with the potential to draw trillions of dollars for the nation.

According to the ministry of energy, Tanzania has discovered 57 trillion cubic feet (tcf) of natural gas. This amount is relatively small compared to the region’s competitors, such as Nigeria with 206.3 tcf, Algeria with 159.1 tcf, Senegal with 120 tcf, and Mozambique with 100 tcf and Egypt with 77.2 tcf.

READ: Tanzania project to transform East Africa’s LNG sector

Tanzania’s natural gas ambition is not an ordinary strategic plan. It is a meticulous and detailed mission that has taken decades. For more than 50 years, Tanzania has been eyeing its glory in the sector via Songo Songo Island and Mnazi bay, where natural gas was discovered.

The 2004 Songo Songo and 2006 Mnazi bay natural gas commercialization was just the tip of the iceberg. The attempt fueled other missions in the sector, especially pulling more resources to exploit the gas offshore and onshore.

Across East Africa, multiple international companies have stepped to the plate to invest in oil and gas sectors, fueling billions to realize the extractive sectors.

Currently, Tanzania is heading the oil and gas race in East Africa, followed by Uganda and Kenya—which have partnered with Tanzania on industry-related projects.

Uganda has tied its ambitious 1,443 Km long heated crude oil pipeline (EACOP) with Tanzania. The to-be longest stretching heated pipeline in the world stands to transform Tanzania and Uganda extensively as a 60 per cent increase in foreign direct investment (FDI) is expected.

Tanzania economic trajectory

Tanzania, which stands on a 4.7 GDP, has been building its economy for a while. Multiple institutions projected the nation’s economy would take several pathways.

The International Monetary Fund (IMF) forecasted a GDP growth of 5.1 per cent in 2022. The African Development Bank (AfDB) projected a 5.0 per cent in 2022 due to improved performance in tourism, the reopening of trade corridors and accelerated rollout of vaccines.

Earlier this month, the Ministry of Finance and Planning noted that the economy would expand by 4.7 per cent.

“We project the growth at 4.7 per cent, taking into account the impact of the Russia-Ukraine war, which has caused continued uncertainty, supply disruptions and soaring food and energy prices in the world,” said Dr Nchemba, quoted by The Citizen Newspaper.

Tanzania is ambitious from an economic growth standpoint. The nation’s Development Vision-2025 gives directions on ensuring high-quality livelihoods while achieving a competitive economy.

The East African nation’s economic growth is now hinged on attaining sustainable private sector development, scaling up investment, curbing natural and unnatural hazards and gaining a solid foothold in food security.

Tanzania’s economy has demonstrated enough vigour to withstand all uncertainties, especially during the pandemic, where Tanzania levitated towards a low-middle-income country status.

The current achievements achieved in the oil and gas economy are fruits of hard labour done by the government of Tanzania to transform the extractive sector and investment industry.

The Tanzania Investment Centre (TIC) recorded over 100 projects worth $60 billion in various sectors, including oil and gas. Tax laws and permit issues have now been settled, clearly conveying that Tanzania means business.

Read: Tanzania primed for East Africa’s LNG investments

The biggest ambitions yet

Earlies this month, the government of Tanzania demonstrated how serious the nation is with a big deal sealed in the nation’s capital, Dodoma, on Saturday (11 June).

The Government of Tanzania and its partners, including global industry giants Equinor, Shell and ExxonMobil, have set the bar so high with a historic Host Government Agreement (HGA), which will realize ambitious gas and Liquified Natural Gas (LNG) mega project.

The $30 billion natural gas project aims to produce 10 million tons per annum of LNG for export with transformational potential for industrialization by bringing investment, technology, skills and infrastructure to the country, which will benefit Tanzanian businesses and its citizens.

“We expect the final investment decision on the LNG project to be reached in 2025,” president of the United Republic of Tanzania Samia Suluhu Hassan commented in a speech at the signing event.

On the other side of the aisle, Tanzania’s current milestone is just the tip of the mountain as the government announced more natural gas explorations in the financial year 2022/2023 to discover reserves in 70 per cent of the area unexplored yet.

“We have found 57 trillion cubic feet. It is a lot but compared to others. This level is small. Our neighbours Mozambique have a wealth of 200 trillion cubic feet because we have only explored 30 per cent of the area believed to have gas,” Minister of Energy January Makamba revealed during the signing event.

According to the Minister, Tanzania has a total of 34 blocks, 22 blocks are empty, and only 12 are active, and operations are going on.

“It could not come at a more critical time for us Tanzanians,” stated Abdulsamad

Abdulrahim Abdulrahim, Chairman of the Association of Tanzanian Oil & Gas Service Providers (ATOGS),

Further, the chairman added, “we have been waiting patiently on the sidelines to establish and develop a national energy industry, for the local economy, for local capacity building, and for the benefit of Tanzania”.

Tanzania is strategically resetting all the cards on the table to be the next powerhouse in Africa. With potential business opportunities opening up and more resources being explored and discovered, the ambition is to be realized sooner.

On that note, Tanzania has an interesting energy growth story and there’s an opportunity for stakeholders to be part of the historic moment.

The Tanzania Energy Congress (TEC), which is held under the patronage of His Excellency January Makamba, Minister for Energy of the United Republic of Tanzania, will highlight the plans and priorities of the Ministry of Energy with regards to the next strategic steps in both the energy and hydrocarbons sector in Tanzania. TEC will kickstart from 3 to 4 August in Tanzania’s commercial capital, Dar es Salaam.

 

Read: Tanzania and Oman ink bold investment agreement

Padili Mikomangwa is an environmentalist based in Tanzania. . He is passionate about helping communities be aware of critical issues cutting across, environmental economics and natural resources management. He holds a bachelors degree in Geography and Environmental Studies from University of Dar es Salaam, Tanzania.

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