Dar, Maputo in battle for gas investors

Friday August 05 2016
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A natural gas facility in south-east Tanzania. The country could have an edge over Mozambique in attracting foreign investments in the gas sector. PHOTO|FILE

Dar es Salaam. Tanzania has placed high hopes for its economic future on its natural gas reserves. The development of the natural gas fields and the accompanying modern infrastructure depend much on the inflow of foreign investments.

What happens, then, when a neighbouring country – in this case Mozambique - has thrice the amount of natural gas resources and is directly competing for the same investors to develop its gas fields?

In that specific case, things boil down to which country offers the better and conducive climate for investments. Experts have always warned that such a scenario is what gives the multinationals a wider room to manoeuvre for better deals, leaving African resource-rich countries with peanuts.

Tanzania has about 54 trillion cubic feet of natural gas in Ruvuma basin in the south east regions of Lindi, Mtwara and parts of Coast Region. Mozambique, on the other hand, has 160 trillion cubic feet, in the same Ruvuma basin.

A report published by Energy Boardroom earlier this week says, however, that despite the fact that the situation seems to have traditionally favoured Mozambique, the scales are now tilting in favour of Tanzania despite having fewer resources.  “A growing number of commentators are today predicting that Mozambique’s LNG dreams will be blown off course by the country’s on-going economic woes. 

Not only is state owned Mozambique Asset Management set to default on $535 million in loans, which it took out to construct shipyards to service natural gas drilling off of its coast, but Fitch Ratings has also downgraded the country’s sovereign credit rating to CCC – a ranking that denotes a very real risk of default and will likely scare many an investor,” the report, entitled Inside Oil&Gas Bracing for the Big Scramble, says.


Tanzania’s impressive economic growth and a positive future outlook is another advantage. Records show the country’s economy is now the second fastest growing in the continent while Mozambique is the seventh largest.  “Tanzania has shown good GDP growth rates in recent years and relatively low inflation…,” Salim Bashir, a partner at KPMG.