BG Group Invests USD 500M in Tanzania Gas

A subsidiary of the BG Group, a British oil and gas firm, recently sent a delegation of their investors to meet with President Jakaya Kikwete in order to discuss their plan to invest USD 500 million in Tanzania gas exploration this year alone, with the intention of investing between USD 10 billion and USD 20 billion in the second half of this decade.

BG Group is one of the largest energy production companies in the world with projects in more than 25 countries; its subsidiary, British Gas International (BGI), first entered the Tanzania market last year, buying 60 percent of the shares of Ophir Tanzania Limited and thereby acquiring their contract between the government of Tanzania and the Tanzania Petroleum Development Corporation (TPDC) for exploration of gas in the Indian Ocean.

The BGI delegation to Tanzania included seven officials, was accompanied by the British High Commissioner to Tanzania, Diane Corner, and was led by the BGI chairman Sir Robert Wilson.

In their meeting with President Kikwete, Sir Wilson who told the president that the BG Group had invested USD 500 million in Tanzania gas exploration last year and would repeat the same investment again this year.

“We are planning to invest between USD10 and 20 billion in second half of this decade in gas and the Tanzanian economy,” said the chairman.

Sir Wilson went on to stress that, because the company’s investment was so substantial, the government of Tanzania should take the appropriate steps to prepare its economy to properly manage the money.

The chairman went on to explain that BGI has already discovered huge reserves of natural gas in three wells in the Indian Ocean, one of which is a deepwater well.

In addition, the chairman Sir Wilson petitioned the government of Tanzania to join forces with BGI in an effort to deal with the current challenges in the exploration and production of gas in the Indian Ocean, particularly with regard to the threat of pirates from Somalia.

In response to his concerns, President Kikwete indicated that the government is prepared to strengthen their efforts to deal with the challenges facing the sector in part by increasing security in the areas in the Indian Ocean where the gas is either being explored or has been discovered in an effort to diminish the risk of acts of piracy.

President Kikwete went on to say that the government is committed to making sure that both Tanzanians and investors benefit from the Production Sharing Agreements (PSA) that the country enters into with private companies that are exploring gas or that have already discovered gas.

“I assure you that we will make sure that the PSA benefit Tanzanians as well as investors,” said President Kikwete in a statement.

In attrition to BGI and President Kikwete, the Minister of Finance, Mustafa Mkulo, and the Minister Energy and Minerals William Ngeleja also participated in the delegation meeting.