A gas plant in Ghana. Equinor, a Norwegian company with interests in the
sector has said it is ready to start talks with the Dar es Salaam
administration on developing an LNG project based on a deepwater
offshore discovery. FILE PHOTO | AFP
The fear among Tanzanian government officials of repeating past
mistakes in mining pacts has been cited as the main cause of delays in
starting negotiations with companies seeking to extract liquefied
natural gas in the south.
The companies and the
government are yet to sign a commercial framework agreement, with Dar es
Salaam saying it needs time to make the right decisions for the benefit
of the country.
Officials are cautious not to bind the government to deals that may prove costly or loss-making in the future.
Energy
Minister Dr Medard Kalemani said the government must be “content with
the kind of agreements that we as a country are going into before
signing the deal.”
Equinor, a Norwegian company with
interests in the sector has said it is ready to start talks with the Dar
es Salaam administration on developing an LNG project based on a
deepwater offshore discovery.
The framework for the
proposed $30 billion LNG plant is expected to outline and define all the
attributes of the project, who is involved, the prices and all
appropriate allocations.
Gas firms say concrete investment decisions are on hold,
awaiting the outcome of the negotiations between them and the
government.
Equinor Tanzania has been given the green
light to proceed with negotiations with the government for the
development of Block 2 offshore Tanzania.
“The host
government agreement (HGA) negotiations between Equinor and the
government will set out the long-term framework for the LNG plant, which
is not a part of the original production sharing agreement, but the
decision to build the LNG plant has not yet been reached,” said senior
vice president and country manager for Equinor Tanzania, Mette H. Ottøy.
“We
have progressed our planning to a point where this is the next logical
step and we are very happy that the government of Tanzania agrees with
this.”
Terms of deal
Royal
Dutch Shell Plc, which drilled 18 wells out of which 16 trillion cubic
feet of natural gas has been discovered, said their focus now is the
host government agreement, which will set out the legislative,
regulatory and fiscal terms of the project.
Shell and
Ophir Energy hold interests in Blocks 1 and 4, while Equinor holds Block
2 offshore Tanzania with a 65 per cent stake in partnership with
ExxonMobil, which holds 35 per cent.
The national oil company, Tanzania Petroleum Development Corporation has an offer of 10 per cent stake.
Tanzania has been exploring for natural gas for more than 50 years, and started talks for further development in 2016.
“Even
if we take 40 years to finalise, the agreements we ratify should
benefit the country and its people. That’s the government’s stand,” said
Dr Kalemani.
Tanzania is blessed with an abundance of
natural deposits, minerals, oil and gas that could potentially transform
the country’s economy if utilised effectively, but the sector has been
clouded with uncertainties, suspicion and vague contracts that have
prevented the country from developing at the speed it should have.
Shady deals
Since
2015, the extractives sector has seen a series of events ranging from
amending laws to firing and charging of government officials involved in
shady deals.
Three teams conducted investigations that
indicted top government officials. President John Magufuli also
dissolved the board of Tanzania Mineral Audit Agency sacked the chief
executive Dominick Rwekaza, and asked that its staff be investigated.
At
the same time, the private firm Tanzanite One paid the government an
undisclosed amount in uncollected taxes plus a penalty and fenced off
the mines to prevent revenue leakages through smuggling.
Two
presidential teams on the gold and diamond sectors estimated Tanzania
to have lost over $620 million in royalties of undeclared minerals.
No comments :
Post a Comment