Oil and Gas: Tanzania’s oil potential enhances economy’s growth

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  • Tanzania has been exploring oil deposits for more than 4 decades
  • The Late President Magufuli challenged the nation’s petroleum company to explore further
  • Uganda’s oil discovery in Lake Albert prompted further exploration in Tanzania’s Lake Rukwa basin

Tanzania’s oil and gas economy improved as the East African nation’s oil exploration struck substantial oil deposits in the Wembere-Eyasi basin earlier this week. The drilled wells have been observed to contain rich contents of hydrocarbon resources—which indicate the presence of oil deposits. There is oil in Tanzania but also a vast potential to expand the economy over the decades.

This victory comes after Tanzania’s oil, and gas economy experienced a significant shift in investment and commercialization, with extensive industry players such as ExxonMobil and Shell committing to exploring Tanzania’s potential.

Africa has made up five of the top 30 oil-producing countries in the world. While nations such as Angola, Nigeria, Algeria, Libya, Egypt, Republic of Congo, Gabon, Ghana, Equatorial Guinea and Chad are leading with oil production, Tanzania’s discovery adds more competition.

By 2019 the region accounted for more than 7.9 million barrels per day, about 9.6 per cent of world output.

Only several days before the Tanzania oil and gas congress kicks off in Tanzania, the discovery of oil deposits in Tanzania stands to spice up the conversation on promoting investment and growth in the sector.

In June, Tanzania’s President Samia Suluhu Hassan brought strategic investment partners to the oil and gas economy, linking up bodies involved, Tanzania Oil and Gas Service Providers, Zanzibar Association of Oil and Gas Services and Oman Society for Petroleum Services (Opal).

As Tanzania had not made commercial oil before the recent discovery, it typically consumes around 35,000 barrels per day of refined oil products, all of which are imported (International Trade Administration).

This situation could change significantly as it stands to leverage the oil production potential to offset the import bill, of which oil imports top the list.

While main business segments demanding petroleum products range from transportation, mining, power generation, mining and aviation – the demand for cleaner and cost-effective forms of fuel is echoed across the sector.

Oil in Tanzania presents an exciting glimpse of the industry’s future and a pivotal moment to learn much about sector utilization and commercialization.

READ: Tanzania, Uganda crude oil deal soars as new MoU is signed

Journey to discovery

Tanzania has been ambitious from day one to strike oil. However, it took a while to find oil deposits, and it will take time to commercialize the oil discovered—a tedious but necessary process.

Oil and gas exploration in Tanzania has been taking place since 1952. The Discovery of oil reserves in Tanzania’s Wembere-Eyasi proves the long wait was worth a while.

In the same suit as its neighbouring nation, Tanzania is to undergo a rigorous process to commercialize the oil discovered entirely.

For instance, in Kenya, which discovered oil and experienced the first stages of (testing) exporting at least 200,000 barrels—the nation is working to build the functioning and healthy infrastructure necessary to tap the existing potential.

Uganda is home to the world’s 0.2 per cent of the world’s total oil reserves and has locked more than $10 billion in investment from a joint venture of oil companies.

Prior to the recent discovery, no oil was discovered except an oil source rock in 1984, and surface oil seeps were observed in the coastal basin and the western rift valley (Tanzania Invest).

The dry spell continued for a while, whereby at least 14 explorations and development licenses were issues covering five different areas across Tanzania. Despite the efforts weighed, no discovery was achieved.

Tanzania didn’t give up. When Uganda discovered oil in the Lake Albert region, it triggered a series of explorations executed by companies in Tanzania’s Lake Rukwa basin via Lake Tanganyika in the western branch of the Rift Valley.

Down the line, in October 2016, Tanzania and the Democratic Republic of Congo (DRC) signed a Memorandum of Understanding (MoU) for joint oil exploration.

In 2019 the Tanzanian Petroleum Development Corporation (TPDC) completed drilling one of the three oil wells, a successful attempt after the late Tanzanian President John Magufuli gave TPDC a challenge to explore further the oil potential.

TPDC dedicated around $857,265 for the Wembere -Eyasi basin exploration project. Tanzania’s agreement to transport oil from Hoima in

Uganda to Tanga port inspired the nation’s ambition to tap into its oil economy potential.

READ: A dive into Tanzania’s gigantic oil and gas ambition

Wembere-Eyasi oil deposits

 

In the context of Africa, Tanzania could be walking into the oil economy club as there is no doubt about the presence of oil in Tanzania.

World Economic Forum (WEF) argues that oil accounts for approximately 3 per cent of GDP and is one of the most critical commodities in the world. Hence, in this line of thought, the government of Tanzania affirmed the continuation of exploration.

“Prospecting will continue, but signs of oil presence are there”, TPDC managing director James Mataragio commented, according to information from The Citizen.

According to information from The Citizen, the narrow stretch along the borderlines of Arusha, Manyara, Singida, Simiyu and Tabora regions has been a scene of oil exploration for years.

The government of Tanzania won’t leave anything un-explored to satisfy its ambition as it plans to export the oil to global markets.

In the same vein, 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 regard 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: Is Tanzania becoming East Africa’s top oil and gas economy?

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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