Tanzanian lawmakers concerned as ExxonMobil plans to sell out of gas field

Dodoma. Parliament’s Budget Committee wants the government to conduct a thorough analysis of the reasons behind the fall in natural gas exploration activities in Tanzania.

This comes amid reports that some investors are contemplating selling their stakes in the sector.

Presenting the committee’s views on the 2018/19 Budget, chairperson Hawa Ghasia said reports that the American multinational Exxon Mobil was contemplating selling its stake in Tanzania’s natural gas sub-sector was especially bad news for the proposed setting up of a mammoth liquefied natural gas (LNG) plant in the country.

“We advise the government to conduct a thorough analysis on what is behind the drop in natural gas exploration activities in the country. This is so that we can work out what should be done as a matter of urgency to rectify the situation,” she said.

Earlier this month, Exxon Mobil announced that it was seeking buyers for its stake in a large undeveloped gas field off Tanzania’s Indian Ocean coast so that it could focus on the development of an even bigger project in neighbouring Mozambique to the south.

Exxon Mobil holds a 35 per cent stake in Tanzania’s deep sea Block-2 field. The company holds an estimated 23 trillion cubic feet (tcf) of natural gas out of Tanzania’s total proven reserves of 57tcf.

Last year, the company also bought a 25 per cent stake in Mozambique’s offshore gas-rich Area-4 development from Eni. Area-4 holds an estimated 85tcf, and is one of the world’s largest natural gas discoveries in recent years.

According to Ms Hawa Ghasia, the Budget Committee also noted that disbursement of the development budget for 2017/18 had been unsatisfactory, with only Sh5.123 trillion of the approved Sh11.99 trillion in development funds disbursed as of March 2018.

With such unsatisfactory disbursement of funds, compounded by dilly-dallying in decision-making, some mega development projects – including the planned LNG plant in Lindi – have been badly affected.

Apart from Exxon Mobil, other partners in the planned LNG project include the government – working through the Tanzania Petroleum Development Corporation (TPDC) – BG/Shell, Statoil, Ophir and Pavilion.

“The committee has identified that, up to this time, the government has not paid compensations to the residents of Ling’oko Village in Lindi District who would have to leave their properties to pave the way for construction of the LNG project.

“Besides, the government has not concluded talks with the prospective investors regarding the project,” she said.

The proposed Stiegler’s Gorge hydropower project is also among the major projects that seem to drag on as a result of a scarcity of funds for development projects.

According to committee chairperson Ghasia, the Parliament approved a total of Sh224 billion for the project last year, but only a measly Sh3.2 billion of that had been disbursed by March 2018.

Overall, the 2017/18 Budget, which Parliament approved last June, may not be fully implemented, come June 30, this year, the committee said, because only Sh21.68 trillion of the total budget was disbursed during the first ten months of the current financial year to cover both recurrent and development expenditure.

This was 63 per cent of the Sh31.7 trillion budget.

Parliament has until next Monday to debate the Budget before voting to either endorse or reject it on the next day.