Tanzania has moved to streamlineoperations in the lucrative natural gas sector with the finalization of a policy whose core objective is to ensure Tanzanians become the prime beneficiaries of the resource.
This comes after the East Africa nation completed the preparation of a Natural Gas Policy document that is now awaiting cabinet approval to become effective. A senior Ministry of Energy and Minerals official said the policy provides a comprehensive framework for guiding thedevelopment of the natural gas industry to ensure optimal benefits to the national economy in the short, medium and long term. “We have prepared a vibrant gas policy that is currently at cabinet level awaiting approval,” said Mwaro Shoo, the Acting Assistant Commissioner for Gas. He added the policy is part of three critical documents that Tanzania has prepared to ensure the country accruesmaximum benefits from the industry worth billions of dollars and which is currently dominated by foreign companies.
The other documents include the Natural Gas Utilization Master Plan and the Natural Gas Act.
Since the commercialization of natural gas,Tanzania has witnessed exponential exploration and discoveries of large quantities of the resource both onshore and offshore. These developments have created challengesto the government in terms of managing the fast growing industry, thus the justification of the policy. “Natural gas resource belongs to the people of Tanzania and must be managed in a way that benefits the entire Tanzanian society,” states the policy. Using the policy, Tanzania wants to provide guidance for the development of the resource to ensure that its benefits are maximized and contribute to the transformation of the Tanzanian economy. In recent years, Tanzania has emerged as a hotspot of natural gas following massive discoveries. Today Tanzania sits on about 15 trillion cubic feet of proven natural gas reserves, equivalent to approximately $150-billion at current prices, which is about six times of the country’s current gross domestic product. With heightened exploration and drilling activities particularly offshore, Tanzania expects that new discoveries could significantly increase deposits to 200 trillion cubic feet in the near future.
Currently a total of 16 international energy companies are licensed to search for oil and gas. Key players include British firm BG Group, Norway's Statoil, Brazil's Petrobras, Royal Dutch Shell and Exxon Mobil Corp. Tanzania intends to use the resource to spur economic growth through electricity generation and exports. Tanzania is already using some of its natural gas to produce electricity, with 450 MW being generated from the resource. The country also targets to be a net exporter and plans for a pipeline connecting it to neighbouring Kenya are at an advanced stage.