By Faridah N Kulumba
Africa-Press-Tanzania The government of Tanzania is seeking to join the Liquefied Natural Gas (LNG) exporters, due to Russia’s invasion of Ukraine spurred Europe to look for new energy sources. Tanzania’s first LNG project investment is estimated to reach USD40 billion. Last year President Samia Suluhu Hassan ordered a speedup of the agreement.
The plan
Tanzania’s government is planning to conclude talks in June 2022, with a group of foreign oil and gas companies led by Norway’s Equinor on developing a liquified natural gas terminal which will be the country’s biggest project.
Benefits
According to the analysts, the sale of LNG on the international market would generate huge revenues for one of the largest East African nations. Tanzania has an estimated 17 trillion cubic meters of gas reserves, which puts it in the position to benefit from Europe’s rush to diversify its energy sources.
Employments
The development of a liquified natural gas terminal project is expected to employ many Tanzanians, thus increasing the government’s revenues through foreign income. Apart from that, the project is also aimed at increasing enough gas energy for Tanzania’s needs, as the world is expected to use LNG in cars by 2030 in order to preserve the environment.
Prioritizing
The President of Tanzania Samia assured that embracing the private sector is her major priority. She added that it’s only the private sector that can bring foreign direct investment and create jobs. President Samia expressed her commitment to fast-track the development of natural gas resources for the benefit of the nation. One month after Samia was sworn in as the President after the death of President John Pombe Magufuli She told members of parliament that the talks over the liquefied natural gas plant had dragged on too long and pledged to finish them speedily so the project can be implemented.
Why is it a priority during Samia’s regime, not Magufuli’s?
Investors’ sentiment over Tanzania soured after the administration of former President Magufuli overhauled mining legislation and ordered contracts to be renegotiated. Tanzania had hoped to resume talks aimed at kick-starting the project following the re-election of President Magufuli in October 2020, who had called for a review of Production Sharing Agreements clauses related to the repatriation of funds, arbitration issues, revenue sharing, and parliamentary power. But unfortunately, Magufuli died of a heart condition in March 2021.
Negotiations
On 29 April 2021, President Samia called for a resumption of negotiations with giant companies London-Shell and Norway’s Equinor that had stalled during President John Pombe Magufuli’s administration for more than a year. Tanzania formed a negotiation team that was tasked to negotiate with the investors. Other international companies include Royal Dutch, Exxon Mobil Corp, Ophir Energy Ltd, and Pavilion Energy Pte.
Obstacles
In 2017, the negotiations between the Tanzania government and International Oil and Gas Companies (IOGC) on Liquefied natural gas stopped because they failed to agree on modalities together and later they agreed to undertake it separately. In 2018 they resumed the negotiations but encountered a hitch after the Production Sharing Agreements were taken to the Attorney General for review, stalling negotiations. Tanzania was seeking to scrap sections on the contract that seem tilted against it.
The negotiations were expected to have concluded by 2019 but Marie Msellemu Tanzania’s Petroleum Development Corporation communications manager explained that they were finalizing compensation for the land in Lindi for the liquefied natural gas site.
Opportunities
The collaboration between Tanzania’s government and the foreign investors on the LNG project will not only bring the best outcome for Tanzania and for the project but will also make the project competitive in the global marketplace, produce and process a vast amount of natural gas power Tanzania’s industrialization plan, support the country’s ambitions to supply gas to the region and reduce dependence on imported oil.
Similar deals
On 4th May 2021, President of Kenya Uhuru Kenyatta together with the Tanzania President Samia announced as they had agreed on a raft of deals, and among the biggest ones is a long-awaited plan to build a 600km cross-border gas pipeline that will run between the coastal cities of Mombasa and Dar es Salaam. The announcement was made, during President Samia’s first visit to Kenya, since she became president in March 2021.
The gas pipeline plans have been in the works since at least 2010, but it was put on the back burner after the relations between the two nations grew strained over a multitude of issues in the last decade, and unfortunately, it worsened during the five years of Magufuli’s presidency.
