Tanzania has barely scratched the ground in determining optimal levels of energy potential. Current seismic data indicate that hydrocarbon deposits particularly in oil and gas, if harnessed can position the nation as a major energy player on the continent.
At present, data indicate that potential proven reserves are estimated to be nearly 57 trillion cubic feet, but in order to truly determine any development, public-private collaboration is the only necessary factor missing.
While Tanzanian authorities are working to develop policies and procedures that could prove a win-win solution for oil majors, energy service providers, and the government, a key factor that must be determined is when will this actually take effect.
There is international interest in pushing forward to develop this nascent industry, and foreign players are hungrily waiting to enter, however Tanzania’s government must lay a groundwork that creates an enabling environment for all players to take a piece of the pie. Otherwise interest will be lost to other hydrocarbon-rich African nations.
It is in this vein that the 2nd Oil and Gas Congress will be held in Dar es Salaam on the 24-25th September at the Hyatt Regency, Kilimanjaro. The Congress offers a fitting international forum to showcase Tanzania’s opportunities for investment in the energy sector.
“Our second Congress will showcase opportunities for foreign energy players to enter Tanzania. The current administration is excited to work with the various IOC’s (International Oil Companies), but the reality is that dialogue must take place in order to set a framework in action. Unless both parties play at an even playing ground, then there’s an occasion for energy companies to enter Tanzania”, said Mr. Abdulsamad Abdulrahim, Vice Chairman of the Association of Tanzania Oil and Gas Service Providers and Director of Pietro Fiorentini, the hosts of this year’s 2nd Oil and Gas Congress.
Currently, Tanzania has been put under international spotlight for reviewing its mining laws. International companies, especially in the extractives industry are on the fence to enter, just waiting to see the outcome of the mining laws that are set to be written.
This in turn also affects international energy companies, as current PSA’s (Production Sharing Agreements i.e. contracts between energy operators and governments) also need to be ratified in order for energy majors to take part in Tanzania’s race to be a hydrocarbon producer.
“While it is known that Tanzania is in review of various extractive agreements, the Congress will provide an opportunity for both local and international companies to meet with the government officials and at least develop a point to move forward. Unless there’s a start on both sides, we won’t see Tanzania move ahead in the oil and gas arena,” said Mr. Abdulrahim.
Over the past year, Tanzania has shown various improvements in being a player in the energy arena. The country signed an agreement with Uganda for the development of the East African Crude Oil Pipeline, that seeks to transport oil from Uganda to the Tanga port in Tanzania.
The Congress will explore the strategic importance of the East African Crude Oil Pipeline (EACOP) that will provide a number of opportunities in the oil value chain and associated sectors, as well as the latest developments of its gas projects.
The government’s agenda to increase reliance on natural gas demonstrates its commitment toward energy development. The Songo Songo gas fields that currently feed 39 factories including Songas, gas-to-electricity turbines and Wazo Hills Cement factory in Tegeta, are but a few examples of how industrial development is taking place.
Discovery of gas presents a great opportunity for new customers to save significantly on their energy costs. A survey by Pan African Energy indicates that the government saved an average of USD 6.2 in terms of liquid fuel offset.
This falls within the government’s agenda toward industrialization, with the intention of becoming a middle-income country by 2025, if and only if, the majority of the country can be powered. Clean and reliable fuel supply to meet upcoming power generation demands brought by new industrial parks of Mkuranga Tanga and Bagamoyo together with other industries flung across Tanzania are good news for the country.
It is for this reason that the demand for clean energy is set to rise.
In order to achieve this, international energy experts are being invited to attend the upcoming Congress. If technology transfer is enabled and provisions are made for the country to employ its natural gas resources, Tanzania can soon achieve its intention of being a middle-income nation and therefore kick-start the “energy-industry” that has been lagging for years.
This year’s Congress will focus on building partnerships between local and international companies by gathering together all major Government and industry stakeholders.
The event aims to be an exciting opportunity for local companies to meet and engage with potential partners for in-depth discussions about developing strategic oil and gas projects, borrow ideas for capacity building and knowledge transfer.
According to Mr. Abdulrahim, “the opportunities for Tanzanian companies and the local workforce in the oil and gas value chain, and many other areas, can be achieved. Local content development is an area that we’re very much looking forward to build. ATOGS, is a critical player in this event and we hope to lobby the various energy players to use more local content, as that’s the only way Tanzania can benefit.”
Considering the potential for Tanzania to be East Africa’s major exporter of natural gas, the country intends to use the resource to drive industrialization and economic development in the country and the region. Local content development is a key concern for the government, and the hope is for more Tanzanian companies to partake in the development of this sector. Let’s hope that the Congress provides a platform to enable an equitable industry with local and international players to work in harmony.