Tanzania gears up to reap from Natural Gas

Rose Athumani

The government of Tanzania opted for onshore Liquefied Natural Gas (LNG) instead of an offshore one to ensure local participation.

Tanzania with recoverable natural gas reserves of more than 57 trillion cubic feet (tcf) is intent on ensuring Tanzanians benefit as much as possible from the fast growing oil and gas industry.

Addressing journalists from Ghana, Uganda and host Tanzania, attending 14 day media training on covering Oil, Gas and Mining in Dar es Salaam, Ms Neema Lugangira, an independent consultant and an expert in local content, said it was important for to have local participation and reap benefits that comes along with the industry.

According to Ms Lugangira who was instrumental in establishing a local content department at the Prime Minister's Office, the offshore LNG does not provide for local participation as is the case with onshore LNG and despite this fact, Mozambique which has natural gas reserves of about 200tcf went ahead and chose to have both.

"Mozambique our neighbor have signed up for both, so they will have a floating one which will come first and onshore one which will come later, so different countries can come up with different decision based on the interest of that country," Ms Lugangira added.

Tanzania on the other had will not bulge in its intent to protect local interests and it is decided that 10 percent of the gas has to be dedicated to the domestic market whether it will be used or not.

"A country needs to set a minimum, because if you don't do that the likelihood is that the investors will want to ship everything and export everything then you will remain with nothing, in the country. This is import also because gas is cheapest source of electricity especially for manufacturing, in the industry trade and also in the car trade," she added.

Tanzania also has a Natural Gas Utilization Master Plan (NGUMP) in place which among other issues, gives direction on how natural gas can be used locally.

Although Tanzania is much more focused on how to have a strong participation in the industry and retain a percentage of the finances to boost the economy, this can only be achieved with a significant participation of local content.

Unlike in the mining sector where there is a lot of employment opportunities, the gas sector according to Ms Lugangira will not be the answer to unemployment issues in the country once the structures are up and running.

Citing an example, she noted that construction of an LNG will initially need more people during construction period but later will cut down to fewer specialized staff with skills that aren't available in the country," so most of them will be from outside whether we like it or not."

She however noted that Tanzanians can participate meaningfully in the procurement part where the money is, noting that like any other organization, 60 to 70 percent of spending is on procurement, "Even if you look at our government budgets 60 to 70 percent of all budgets is procurement. That means, that is the strategic and important part of making sure that our countries can benefit through the procurement."