24 February 2013

Tanzania: British Firm Says Revenue From Gas Due After 10 Years

PROSPECTS of the country earning more from gas will likely come true by 2020/21 as more companies are undertaking appraisals on the exact quantity of gas deposits found in the country and whether or not they warrant commercial extraction.

Speaking in Dar es Salaam last Thursday, British Gas (BG) East Africa president and Assets General Manager, Derek Hudson and Dr Antony Wyatt from Robert Gordon University, said the public should not expect revenue flowing to the Treasury any time soon.

"We expect to start paying government revenue by 2020/21 financial year if everything goes well," said Mr Hudson. He said BG Tanzania which is a subsidiary of BG Group of Britain and its partner, Ophir Enegry Plc, have so far invested 2 billion US dollars. "We expect to start testing of our gas finds in Mtwara very soon," said Hudson, a Trinidad and Tobago national whose country first discovered oil in 1908 but took over 20 years before revenue started flowing to the government.

Hudson pledged BG Group's commitment to transparent payments to government saying that as a member of Extractive Industry Transparency Initiative (EITI), openness is not an option. In his remarks, Dr Wyatt said actually Tanzania has not yet established proven gas reserves. "What is available at this point in time are estimates of the resources and not proven reserves," Dr Wyatt argued even as government and Chinese companies are constructing a billion dollar gas pipeline from Mtwara to Dar es Salaam.

The deal involves the construction of a 532-kilometre pipeline from Mnazi Bay and Songo Songo Island in southern regions of Lindi and Mtwara where over 10 trillion cubic feet of natural gas reserves have been confirmed by experts. The project which is jointly implemented by China Petroleum and Technology Development Company (CPTDC), a unit of the China National Petroleum Corp (CNPC) and state-run Tanzania Petroleum Development Corporation (TPDC), is expected to start producing power and generating an income this year.

Dr Wyatt pointed out that currently, most companies including BG Tanzania are investing heavily to establish exactly how much natural gas is available. Asked why private companies are disputing Ministry of Energy and Minerals estimated 35 trillion cubic feet of reserves announced last year, Wyatt argued that the estimate is simply a resource estimate and not a confirmed reserve. BG Group acquired a 60 per cent stake in Ophir Energy Plc in 2011.

Ophir which has been in the country since mid 1990s when it was licensed to explore and produce liquefied natural gas is one of the companies accused of bribing senior government officials between 1995 and 2005. Kigoma North lawmaker, Zitto Kabwe has been pushing government to investigate five former senior government officials who together have over 196 million US dollars (over 319.8bn/-) stashed in Swiss based bank accounts allegedly paid as bribes by Ophir Energy through Moto Mabango.

But Ophir's agent, South African national, Mr Mabango issued a statement through his lawyers last month demanding that Mr Kabwe retract the statement made in parliament last November or risk court action. Johannesburg-based Lawley Shein Attorneys issued Kabwe with the demand note demanding that the youthful Kigoma North legislator, retract his comments he made last November relating to allocation of oil exploration blocks in the country between 2004 and 2005.

Lawley Shein Attorneys said Kabwe's statement tarnishes their client, South African oil millionaire Moto Mabango who was described as a corrupt Congolese national during parliamentary session. Adjourning the last ordinary session of Parliament in Dodoma, Prime Minister Mizengo Pinda said a taskforce will be formed to follow up on the controversy with a goal to reclaim the money.

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