Thursday, August 10, 2017

Govt needs to pull up its socks in lng project

The government’s decision to put on hold projects related to gas and oil – including the liquefied natural gas (LNG) project – as it seeks to incorporate the provisions of recent laws in the management of Tanzania’s God-given richness may put Tanzania on the losing end. In July, Parliament approved the Written Laws (Miscellaneous Amendments) Bill, 2017 in which the Petroleum Act, 2015 was also amended.

Much as the amendments meant that the Production Sharing Agreement (PSA) between the government and oil companies will also have to be in line with the new legal provisions, it would be everybody’s guess work that this should not have been something to delay implementation of multi-billion dollar projects.

As a country, it may be apt to understand that Tanzania is competing for investors with many other countries including Nigeria and the neighbouring Mozambique.

So far, Tanzania has discovered about 55 trillion cubic feet of natural gas yet Mozambique has found about 200 trillion. This means that it is technically suicidal for Tanzania to be delaying the process further.

Besides, most of Mozambique’s gas has been found along the Ruvuma Coast to the border with Tanzania, suggesting that any serious development in the former may also negatively affect the latter.

With global oil production projected to reduce further as the Organisation of the Petroleum Exporting Countries (Opec) cuts output to raise prices, this remains the right time for Tanzania to get the right share of what major energy firms invest as they shift their attention to natural gas.

It should also be noted that several companies are also exploring for shale gas (natural gas that is found trapped within shale formations) and on sea base in other developed countries. This means that any delay may see investors shifting their attention from Tanzania to other places.

Much as the amendments were a good thing, they should not be the reason to jeopardise ongoing developments for the general good of the nation’s economy.