Tanzania’s newly approved Natural Gas Policy makes clear that the government prioritises domestic supply of Natural Gas over LNG exports, which have been the focus of much media attention.
“Natural Gas will be exported when domestic market has been satisfied”, remarks the 45 page policy, approved by the Tanzanian cabinet in October 2013.
“Whereas the main incentive for international oil and gas companies to develop natural gas reserves is for export market”, the policy argues, “Tanzania aims to have a reasonable share of the resource for domestic applications as a necessary measure to ensure diversification of the gas economy before export market”.
As gas discovery after spectacular gas discovery has been made offshore Tanzania in the last three years, global attention has focused on news that this was going to be a new export hub. Their Indian Ocean location supposedly makes the Tanzanian and Mozambican gas resources highly competitive for the Asian gas market. The Tanzanian Government itself claims that the country has about 43Trillion Cubic Feet of Gas Reserves.
The business media has widely reported that Norway’s Statoil and the UK’s BG Group will construct a $15 billion liquefied natural gas (LNG) plant in the East African country. Tim Dodson, Statoil’s head of exploration, was quoted as saying that the company needed eight to ten trillion cubic feet (Tcf) of gas to underpin an LNG project, “and to date we have found 10 to 13Tcf”. When in mid-November 2013, Ophir Energy reported it had entered into an agreement to sell to Singapore based Pavilion Energy a 20 per cent interest in Tanzanian Blocks 1, 3 and 4 for consideration of $1.288 Billion, everybody knew that the buyer was targeting the LNG export potential of the asset.
In the new policy, however, the Tanzanian Government “envisages coordinated utilization of gas on the basis of a National Gas Utilization Master Plan, and that to the extent possible, detailed technical and economic analysis should guide selection of the best project for implementation that will address mutual interest of investors and the Nation. The Government, through its entities, intends to participate in the selected investment projects including GTL and LNG value chain”.
See also: Tanzania’s Natural Gas Policy