SA OUTLOOK
ENERGY
Tanzania Needs to Modernize its Fiscal Terms to Become a Regional and Global Gas Hub Tanzania could potentially become a regional and global natural gas hub; however, the government will need to accelerate the modernization of its tax and policies.
such as tax and fiscal policy reforms and regional partnerships, Tanzania’s gas market is entering a new era. In November 2021, H.E. January Makamba, the Minister of Energy, Tanzania, visited Saudi Arabia and Algeria to discuss cooperation on gas development and investment opportunities for Algerian and Saudi energy firms within the
Tanzania, with its 57.54 trillion standard cubic
east African country’s gas market. Additionally,
feet of natural gas reserves, has the potential to
in 2021, the government, through the Petroleum
become a regional and global energy hub. With
Upstream Regulatory Authority (Pura), also start-
global liquefied natural gas (LNG) prices anticipat-
ed discussions with international oil and gas firms
ed to increase and peak in 2025, and supply deficit
to kickstart the country’s LNG market expansion.
anticipated from 2024 onwards, Tanzania, owing
With Pura expected to sign Host Government
to its strategic location and vast gas reserves, is
Agreements worth $30 billion with Shell, Equinor,
well suited to become a global supplier.
ExxonMobil, Pavilion and Oph by the end of May
The African Energy Chamber (AEC), in its Q1
2022, for the development of a large-scale LNG
2022 report, the State of African Energy, estimates
project in Lindi province, massive investments will
that Tanzania has the potential to produce up to
flow into the country’s gas market.
20 million tons of LNG per annum. However, fiscal
However, with both the Financial Investment
terms have forced some majors to pause business
Decision and development of the Lindi LNG project
expansion plans within Tanzania, hampering the
anticipated to take six years, the AEC as the voice
development of the country’s extensive offshore
of the African energy sector, is calling for the Tan-
gas resources. In 2020, Equinor wrote off $900
zanian government to fast track the development
million from its books related to Tanzania LNG proj-
and implementation of capital-attractive tax, fiscal
ects. The government has also been struggling to
and policy reforms to accelerate the development
attract investment and increase the participation
of the LNG initiative whilst also attracting other
of international firms to boost gas exploration,
investments to kickstart a series of exploration ac-
production and infrastructure development. How-
tivities aimed at expanding the country’s reserves
ever, with the government starting to revitalize the
and production capacity. With the M&P Explora-
hydrocarbons market through various initiatives
tion and Production Tanzania-operated Mnazi Bay
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