058_G17_InFocus_Tanzania

Global_17

In Focus Tanzania  following the global economic crises, has returned to seven per cent. A vast expansion of the private sector has been the principal driver of growth and, although gold prices have dipped over the past year, Tanzania is expected to maintain its growth trajectory over the next five years at least. The game changer for Tanzania has been the discovery of vast volumes of natural gas, both onshore and offshore. Properly managed, this should provide the shot in the arm the country needs to aim for double-digit growth leading up to 2025. and gas. British gas firms BG Group and Ophir Energy, Norway’s Statoil, Brazil’s Petrobras, Royal Dutch Shell and Exxon Mobil Corp are among companies already operating in Tanzania. BG and Ophir control 15 tcf off the Tanzanian coast and have announced plans to build a US$10 billion LNG plant in southern Tanzania to ship gas to Asia where demand is high. In November, Ophir Energy sold a 20 per cent stake in three natural gas blocks to Singapore’s state-owned Pavilion Energy for $1.3 billion. This, the first major deal in the Nigeria’s Dangote Cement has invested $500 million in a new plant in Mtwara, which, at full capacity, will produce three million tonnes a year The volume of reserves has been estimated at around 50 trillion cubic feet (tcf), but the country’s Energy Minister, Sospeter Muhongo, has said: “It is expected that Tanzania’s natural gas resources will rise to 200 tcf after the next two years.” While this may sound too optimistic, there is more than sufficient gas to attract the attention of some of the world’s biggest players. Tanzania has currently licensed 16 international energy companies to search for oil country’s natural-gas sector, could be the forerunner of similar deals in the future. Pavilion said: “The natural-gas developments in Tanzania hold tremendous potential – not just for Pavilion Energy, but for Singapore and Asia.” Singapore generates most of its energy from gas. Japan, which will depend more heavily on gas as it winds down its nuclear fuel programme, is already active in Mozambique, Tanzania’s southern neighbour which has also discovered vast quantities of natural gas. Projections are that, with combined output from the two countries, Africa could become the third largest producer of natural gas in the world. But the excitement generated by the discoveries has led to heated debates about who will get what from the bonanza. There are suspicions that foreign companies will pocket the lion’s share of the spoils and little will trickle down to the people. In a bid to allay fears, President Jakaya Kikwete said: “The production-sharing formula will either be 35 per cent to investors and 65 per cent to the government or 25 per cent to them and 75 per cent to us,” while launching the fourth and final licensing round, which will run until mid 2014. He has also said that the government will look at the possibility of making shares available in the Tanzania Petroleum Development Corporation “if we want more Tanzanians to participate in the oil and gas industry”. The country’s new gas policy is also very clear that a good part of the gas will be used domestically, which will hopefully end the consistent power outages that have badly stymied industrial output. By-products of the gas will also be used to produce muchneeded fertiliser. Despite Tanzania’s steady growth, poverty levels and unemployment have hardly budged since the 1990s, largely because, according to the African Development Bank, the agricultural sector, 58 l www.global-briefing.org first quarter 2014 global


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