Tanzania moves to secure gas earnings

Fumbuka Ng’wanakilala Dar es Salaam

Tanzania was to set up a sovereign wealth fund to ring fence future earnings from its major gas discoveries in the southern parts of the country along the Indian Ocean coastline, its president said.

The nation tripled its estimated gas reserves in June after offshore finds by Norway’s Statoil, US group ExxonMobil, Britain’s BG Group and its partner Ophir Energy.

President Jakaya Kikwete said his government was studying various models for managing revenues from gas production, adding that they were focusing on those that had sovereign wealth funds.

“We want to learn from them by setting up our own fund to ensure we similarly benefit,” he said on Wednesday.

When the country sets up the fund it will join other African countries such as Nigeria and Ghana, which are moving towards the establishment of state-owned investment funds for revenues generated from the energy sector.

Kikwete said the government’s intention was to ensure natural gas revenues were used to speed up development. “Since 1954 some 61 wells have been drilled. Out of those, natural gas was found in 22 wells… We haven’t been lucky yet to find oil but we have discovered gas in both onshore and offshore areas.”

Tanzania’s recoverable gas reserves stood at 28.9 trillion cubic feet, Kikwete added. “Offshore oil and gas exploration started in 2004 with just one company but we now have 18 companies… I believe that a lot more gas will be discovered.”

Tanzania could see a rise in revenue of up to $3 billion (R23bn) a year from gas exports, according to the World Bank.

Kikwete said the government was working on a new national gas policy, utilisation master plan and legislation to regulate the fast-growing industry. – Reuters