Tanzania upstages Mozambique on gas

Posted on :Monday , 29th August 2016

Tanzania, which won the geopolitics battle with Kenya, by snatching away the pipeline deal, has also upped its stake with its gas plant, trying to upstage Mozambique, which is still reeling from dampened investor confidence, following the $1 billion hidden funds scandal with IMF.

The start of the gas pipeline plant will also raise confidence on the Tanzania-Uganda oil pipeline deal championed by Paris-based Total, which was one of the riders Kampala received, allowing Dar es Salaam to draw level with Nairobi.

Early this week, President John Magufuli gave his government officials a dress down over the slow implementation of the project. Dr Magufuli instructed them to speed up the long-delayed work on the planned $30 billion liquefied natural gas (LNG) onshore export terminal in Lindi.

Shell, Exxon Mobil and Ophir Energy plan to build the facility in partnership with the Tanzania Petroleum Development (TPD) in the next four years, but the project has been delayed by land acquisition wrangles and legislation challenges, despite the passing of the Petroleum Act in last year.

“I want to see this plant built. Sort out all the remaining issues so investors can start construction work immediately,” Mr Magufuli said while meeting with Oystein Michelsen, Statoil’s Tanzania country manager.

In January, TPDC announced that it had acquired the title deed for the 2,071 hectares that have been set aside for the construction of the planned LNG terminal at Likong’o village in Lindi. The country’s parliament is set to debate the matter.

It is understood that Magufuli’s timing for the announcement is meant to give Dar es Salaam an upper hand in the market over Mozambique, owing to the latter’s recent issues, including the renewed Renamo insurgency that has unsettled investors.

Maputo has also scared off investors through its new hydrocarbon law clauses on local content, which analysts say will prolong the gas project’s timelines.

Quicken its pace

John Roper of Uniper Global Commodities said that the region must quicken its pace as the race for supply contracts accelerates.

“The region benefits from convenient geography, with the coastline acting as a springboard to market in India, China, Japan and Northern Europe. Tanzania is just acting quickly to court investors in a bid to leverage its assets,” Mr Roper said.

Last week, Energy Minister Sospeter Muhongo said that Tanzania should expect an “economic revolution” with $30 billion investment in gas liquefaction facilities.

In May, Tanzania announced that it will also be building a gas pipeline to Uganda. It is understood that the project is at the planning stages.

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