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Thursday, May 26, 2022

Tanzania to Develop its Natural Gas Reserves

Though the discovery of gas in Tanzania was in 1974, massive production only started in 2004. Since the discovery of natural gas as a significant source of energy, its demand is now high.

Global leaders are on the lookout for the expansion of exploration sites. Though foreign companies are leading in the oil and gas sector, the government is now interested in securing the massive revenue it is generating.

There are many opportunities in the natural gas sector which will, in turn, lead to economic growth and eradication of poverty in Tanzania.

We will look at the opportunities in the natural gas sector in Tanzania and the current development plans on its reserves in this context.

A Glance at Tanzania’s Natural Gas Reserve Market

According to (BP 2012), Africa ranks fourth, rating 8% in the global records of natural gas reserves. Generally, 8% goes to Asia, 35% to Eurasia and Europe, and 40% to the Middle East.

However, Tanzania ranks fifth in the Natural gas reserves in Africa with 6%, after 10% from Libya, 15% from Egypt, 31% from Algeria, and 35% from Nigeria.

There is a noticeable growth in the global natural gas reserve from 80 trillion cubic meters to 200 trillion cubic meters from 1980 to 2010.

The Ministry of Energy in Tanzania estimates that the country has 57 trillion cubic feet of natural gas reserves as of 2021, which can recover about 70%.

The Discovery of the Ruvuma Basin gas field in Tanzania around 2013 stirred up new interest in the sector. There has been increasing onshore gas production even though there isn’t yet any oil discovery in the country.

Presently, industrial consumers and companies in the power sector across Dar es Salaam are using the natural gas reserves in Tanzania. There are plans to expand to foreign customers.

Since Liquefied Natural Gas (LNG) development, the prediction is that by 2040, Asia will be its most significant consumer. While Tanzania and Mozambique could be exporting to Asia and the Middle East, Angola and Nigeria may export to North America and Europe.

Reserve Discoveries

Tanzania has many small and large natural gas reserve discoveries. The Sango Island discovery occupies 551 billion Cubic feet, whereas Mnazi Bay covers 5 trillion Cubic feet, and these two are the smallest in the country.

Other reserve discoveries are in Blocks 1, 2, and 4. Royal Dutch Shell is the explorer of Block 1 and 4, which covers 25.4 trillion cubic feet.

The company, in 2016, after it has acquired the assets of BG Group, became the explorer of these blocks.

Block 2, however, covers 22 trillion cubic feet, which makes it the second-largest in the country. Block 2 is a discovery by Statoil and ExxonMobil of Norway.

Natural Gas Production

In 2015, Sango Sango was the highest natural gas production field located in the Southern offshore zone of the country.

The field produces 90 million cubic feet every day, representing the country’s 85% production.

The Sango Sango field is run by PanAfrican Energy Tanzania (PAET), reserving 40 million cubic feet of their daily production and then selling the rest to the other players, including TANESCO.

Mnazi Bay is the second highest production field run by Maurel & Prom from France in partnership with TPDC and Wentworth Resources from Canada.

The field produces 60 million cubic feet every day. There was a massive increase in production from 2014 to 2015, which amounted to 783 million cubic feet to 5.79 billion cubic feet.

The third production field is the Kiliwani North field which produces 15 million cubic feet every day as of 2016, and Aminex operates the area.

Regulations in the Sector

Before we delve into the setup regulation in the gas sector of Tanzania, let’s take a look at the list of the various agencies overseeing the industry;

  • Ministry of Energy
  • Ministry of Minerals
  • Petroleum Upstream Regulatory Authority (PURA)
  • Energy and Water Utilities Regulatory Authority (EWURA)
  • Tanzania Petroleum Development Corporation (TPDC)
  • Tanzania Electric Supply Company (TANESCO)
  • Rural Energy Agency
  • Petroleum Bulk Procurement Agency (PBPA)
  • Tanzania Geothermal Development Company
  • National Development Corporation

The many regulations set up by the Tanzania energy sector are to control the activities in exploration and production of their many products.

The petroleum Act of 2015 made TPDC a separate oil company making its regulations. The act granted TPDC the power to grant petroleum rights, own 25% on any project, and make the Ministry of Energy the only issuer of licenses.

The 2015 law governs only the zones of the offshore and mainland of Tanzania, and Zanzibar has its rules.

The Zanzibar Oil and Gas (Upstream) Act of 2016 led to the creation of Zanzibar Petroleum Development Company and Zanzibar Petroleum Regulatory Authority.

Tanzania’s Aspiration on Development of Natural Gas Reserve

The president of Tanzania, Samia Suluhu Hassan, has begun to negotiate with stakeholders in the oil industry to revive them.

The negotiation is part of the country’s endeavor to be among Liquefied Natural Gas (LNG) exporters by 2023.

The chairman of ATOGS (Tanzania Association of Oil and Gas Service Providers), Abdulsamad Abdulrahim, alongside other stakeholders, are putting heads together to resolve the existing disagreement among producers.

Presently, the country has gas reserves of approximately 57 trillion cubic feet. These developments are to harness foreign investment making at least 30 billion dollars, and the effort will also flee the country’s gas reserve from energy change.

Based on present demand, by 2025, the second most generally used energy source in Tanzania will be natural gas. Though oil will still be dominating, coal will follow after natural gas.

Does Tanzania Export natural gas?

For more than 50 years now, Tanzania has been producing and exporting natural gas. Its first discovery was at Songo Songo Island, which is in the Lindi Region, and another finding is in the Mtwara Region, the Mnazi Bay.

Is there natural gas in Tanzania?

Tanzania ranks as the 82nd in the global natural gas reserves, and it accounted for 0.003% of the world, holding 0.23 trillion cubic feet as of 2017.

Which country produces the most natural gas in its reserves?

As of 2020, Russia produces the most natural gas in its reserve across the globe, accounting for 37.4 trillion cubic meters.

How do you develop natural gas resources?

The best way to develop natural gas resources is by producing and drilling them. Most production comes from sedimentary rock and shale formations.

Conclusion

Massive production of natural gas by the energy sector in Tanzania is on the verge of being a reality as many development plans are in progress.

With the already existing infrastructures, including the pipeline and midstream processing plants, the sector is ready to explore many potentials, especially the Liquefied Natural Gas (LNG).

There is a need to develop trade, fiscal, industrial, and economic policies and increase training and employability skills for this to happen.

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