What gas discovery means to Tanzania

Mobhare Matinyi, The Citizen, Friday, 02 March 2012. This e-mail address is being protected from spambots. You need JavaScript enabled to view it The biggest news in the world of energy in the last days of February was the discovery of a significant amount of natural gas off Tanzania’s southern coast by Statoil of Norway and ExxonMobil of the United States.

It was thrilling to hear Tanzania’s name for such a good reason even though the excitement came with a lot of worries about whether the country would benefit from the massive discovery, bearing in mind that the previous discoveries of natural gas reserves and minerals have yielded very little so far.

If the recent discovery is proven accurate, Tanzania will move into 34th place from the current 84th in the global ranking of countries with significant natural gas reserves. In Africa, the country will rank fifth behind Nigeria, Algeria, Egypt and Libya, up from the previous 16th place.

This is not the end of the good news for Tanzanians as more massive discoveries are on the way. Last week Statoil Executive Vice President for Exploration, Tim Dodson, noted: “This discovery is an important event for the future development of the Tanzanian gas industry.”

The Statoil statement was seconded by the Managing Director of Tanzania Petroleum Development Corporation (TPDC), Yona Killaghane, who said: “This discovery could potentially be a catalyst for large scale natural gas developments in Tanzania.”

Furthermore, according to Tanzania’s Ministry of Energy and Minerals, currently there are 15 oil and natural gas exploration firms working in Tanzania with potential for good news in less than five years.

Additionally, if the United Nations grants a permission to expand Tanzania’s territorial sea as requested recently, more discoveries could be announced in the coming decade.

The recent discovery in Zafarani exploration well which has approximately 5 trillion cubic feet of natural gas means that Tanzania now has a total of natural gas reserves of about 15 trillion cubic feet, equivalent to 425 billion cubic meters.

In energy analysis, Tanzania’s proven natural gas reserve is the equivalent of 2.6 billion barrels of oil as the two amounts release the same amount of energy although they differ in monetary value.

Just as a flashback, Tanzania confirmed the amount of 10 trillion cubic feet of natural gas reserves in September 2011 up from the previous 7.5 trillion in January 2011. Earlier Tanzania had only 3.3 trillion of natural gas reserves. What a jump in just a year?

If this trend continues, Tanzania will soon become a major producer of natural gas something which will completely transform the East Africa’s second largest economy. Already, according to various sources, Tanzania is one of world’s fastest growing economies.

The Zafarani discovery will bring the much-needed Foreign Direct Investment (FDI) into Tanzania, starting with $500 million this year alone. Not surprisingly, the Chairman of British Gas International (BGI), Sir Robert Wilson, thinks that by the end of the decade his company will inject about $20 billion into the economy.

Moreover, World Bank estimates that in the next 25 years Tanzania’s natural gas industry will receive about $35 billion alone.  Based on these projections, in about ten years or so Tanzania’s Gross Domestic Product (GDP), per capita income, export earnings and government revenue are set to skyrocket.

Likewise, for the first time in decades, Tanzania will be looking into balancing its government budget, getting rid of the humiliating foreign aid, significantly reducing external debt, and completely forgetting about international trade deficit.

These are just a few basic outcomes of the recent discovery. If we work seriously without mixing these blessings with entrenched corruption, deliberate embezzlement of public funds, and widespread impunity, accordingly, the country will witness considerable developments in infrastructure, agriculture, industries and energy.  

With such a thriving natural gas economy, Tanzania will be able to tackle the issues of unemployment, build a strong service industry and address the chronic problem of inadequate social services such health care and education. Yes, this is not a mere a dream; it is possible!

However, our political leadership, civil service, and public attitude must change now. Short of that, Tanzania will simply become another disappointing African story like Nigeria, Angola and Equatorial Guinea.

This week’s warning from the country’s World Bank chief economist, Jacques Morisset, must be taken seriously by everybody in Tanzania. He noted that although GDP doubled in the last 10 years, the country failed to halve the level of poverty as is the case with other countries.

In other words, this natural gas discovery may end up making exciting news headlines but leaving our leaders commenting in interviews that they don’t know why Tanzania is poor.
We have already witnessed this nuisance and we think it is enough!

My dear fellow Tanzanians, this discovery of natural gas means a lot to the future of our country; let us not take it lightly! We have lost enough wealth already!