Tanzania has drafted policies aimed at channelling the benefits of a gas boom to its own people, in the face of a fatal riot over plans for a new pipeline.
The draft policy paper seen by Reuters proposes gas companies list on the local stock exchange, creating a gas revenue fund and a national oil and gas company, and locating plants onshore to liquefy the gas from the offshore fields.
Tanzania estimates it has 41.7 trillion cubic feet (tcf) of recoverable natural gas reserves. Discoveries offshore of Tanzania and Mozambique’s waters have led to predictions the region could become the world’s third-largest exporter of natural gas.
Mtwara, one of two regions in southern Tanzania picked for liquefied natural gas (LNG) plants, saw its residents riot on Wednesday, protesting that a budget presentation to parliament failed to show how the construction of a 532 km (330 mile) pipeline through their region would benefit them.
The 2013 draft natural gas policy plans to “ensure that the domestic market is given first priority over the export market in gas supply.”
“To develop the capacity of Tanzanians to participate strategically in the natural gas value chain, the government shall ensure companies participating in the natural gas value chain are listed on the Dar es Salaam Stock Exchange,” it said.
Tanzania Energy and Minerals Minister Sospeter Muhongo said the policy had been submitted to the government for approval.
“Implementation of the natural gas policy will start in 2013/14 after a government decision,” he said in parliament on Wednesday.
Under the proposals, the government requires companies to build natural gas processing facilities onshore, although around 80 percent of current gas discoveries have been made offshore.
Muhongo said the government would also put in place an upstream oil policy and natural gas laws by next year.
British BG Group said earlier this month it would present the government with proposed onshore locations for a big LNG terminal in the next few months.
BG is working with its exploration partner Ophir and Norway’s Statoil, which has found gas in the waters near to BG’s discoveries, on the planned $10 billion project.
Investors in the Mtwara project – financed by a $1.2 billion Chinese loan – are TPDC, Canada’s Wentworth Resources and France’s Maurel & Prom. It is expected to take 12-14 months to complete.
President Jakaya Kikwete said on Wednesday Tanzania’s natural resources belonged to all its citizens and that only 14 percent of the gas would be transported to Dar es Salaam and other regions.
He said the rest would stay in Mtwara, for power generation and for use by industries to be set up in there.
Muhongo said exploration companies planned to drill 17 new wells in the country during the 2013/14 (July-June) fiscal year at a cost of at least $680 million.
Tanzania plans to offer eight oil and gas exploration areas for licensing in October.
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