The Government of Tanzania (GoT) is seeking consultants to assist its Government Negotiation Team (GNT) to undertake negotiations with oil & gas companies for the…
Tanzania has been exploring for natural gas for more than 50 years. The first natural gas discovery in Tanzania was made in 1974 on the Songo Songo Island (Lindi Region) followed by a second discovery at the Mnazi Bay (Mtwara Region) in 1982.
Natural gas was discovered both offshore and onshore the Songo Songo Island, while the gas discovery at Mnazi Bay was only offshore.
The natural gas from Songo Songo was first commercialized in 2004 and the gas from Mnazi Bay in 2006.
The commercialization of the two discoveries propelled further gas exploration both onshore and offshore.
From 2010, Tanzania has witnessed further exploration and natural gas discoveries with current (2016) estimated natural gas reserves of 57 trillion cubic feet (TCF).
Tanzania Upstream Natural Gas Activities
A total of 67 wells for both exploration and development were drilled between 1952 and 2013, of which 53 wells are in onshore basins and 14 in the offshore basins.
5 oil and gas companies are currently undergoing natural gas onshore and offshore exploration activities in Tanzania namely Ophir Energy, BG Group (BP), Statoil, Exon Mobil and Aminex.
According to the latest data from the Central Intelligence Agency (CIA), natural gas annual production increased from 5.2 billion cubic feet (BCF) in 2006 to 35.1 BCF in 2013.
During the same period, gas consumption per capital in Tanzania rose from 0 to 571 cubic feet.
Tanzania Mid and Downstream Natural Gas Activities
The Energy and Water Regulatory Authority (EWURA) is responsible for regulating midstream and downstream natural gas activities that include processing, transportation, storage and distribution of natural gas in mainland Tanzania.
Midstream and downstream natural gas activities in Tanzania are being carried out by 4 companies: Tanzania Petroleum Development Corporation (TPDC), Songas, Pan African Energy Tanzania (PAET), and Maurel & Prom (M&P).
Songas generates electricity using gas from the Songo Songo Island gas fields. Gas from the Songo Songo gas field is processed on the island at Songas’ processing facility and then transported to Dar es Salaam where it is used in Songas’ Ubungo Power Plant (UPP), the largest gas-fired power station in East Africa.
PAET is Tanzania’s first natural gas producer, supplying gas for power generation at the Ubungo Power Plant in Dar es Salaam from the Songo Songo gas field.
M&P produces and delivers natural gas from Mnazi Bay to Dar es Salaam through the Mtwara-Dar es Salaam pipeline for power generation.
The Ministry of Energy and Minerals implements its oil & gas exploration and development policies through TPDC.
The roles of TPDC include promoting and monitoring the exploration of oil & gas, developing and producing oil & gas, contracting concessions, franchises and licenses, conducting research and development of the industry.
TPDC estimates that the country’s gas fields are large enough to cover the domestic power requirements and make Tanzania the next natural gas hub in Africa.
Tanzania Gas Infrastructure
On July 21st 2012, Tanzania signed a contract with three Chinese companies to start construction of a 512-km pipeline leading from Mtwara to the country’s capital Dar es Salaam.
The project was financed by a Chinese loan as well as grants from the World Bank (USD300m) and the African Development Bank (USD200m).
The development of the Mtwara-Dar es Salaam gas pipeline included the construction of Madimba Processing Centre, which is operated by state-run Gas Supply Company Limited (GASCO) and that in June 2015 received its first delivery of natural gas for commissioning purposes.
The pipeline and processing plant are part of the Government’s program to add over 2,000 MW of new gas-fired power by 2018 and total 10,000 MW of generation capacity by the year 2025 up from the 1,500 MW in 2015.
The aim is to reduce dependency from hydropower, representing 33% of Tanzania’s power generation in 2014 and whose capacity has been affected by recurring droughts that are hitting the country.
Jay Bhattacherjee, CEO of Aminex, an Africa-focused oil and gas exploration and production company with two operated discoveries in Tanzania, explained to TanzaniaInvest that the company decided to invest in Tanzania thanks to its developed gas infrastructure, and specifically the Mtwara-Dar pipeline.
Tanzania Gas Legal Framework
The key instruments governing oil & gas operations in Tanzania include: Petroleum Act 1980, National Energy Policy 2003, Petroleum Act 2008, National Natural Gas Policy 2013, and Petroleum Act 2015.
As included in Tanzania’s Natural Gas Policy from 2013, the country aims at achieving a competitive natural gas industry contributing significantly to broad based growth and socio-economic transformation of Tanzania.
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