A tremor in the worlds petro markets was caused recently by Norway’s sovereign fund proposing to sell off some USD 35 billion of its oil and natural gas stocks. It caused a sharp but temporary drop in the worlds petro-stocks until the Norwegian Central Bank, that manages the fund, explained that they had merely made a proposal to the Ministry of Finance. The Ministry will now consider the proposal and perhaps take it to the national assembly. A final decision is not expected before far into 2018.
Although the environment lobby was jubilant, the Central Bank denied that the shedding of oil stocks took place because the bank saw a future decline in the global petro industry. The Deputy Governor argued that the move was meant to diversify the economy and guard against drops in petroleum prices. Norway derives a hefty 20% of its GDP from oil and gas.
Still, the divestiture of petro stocks, if it happens, will affect the capital flow for investment in the world’s petro industries. (Note that Exxon is Statoil’s major cooperation partner on the Tanzanian shelf. At the same time Exxon stocks are the second biggest holding now perhaps to be divested from the Norwegian oil fund.)
On the 17th November 2017, the Speaker of the Parliament of Tanzania formed a Special Advisory Committee of the Parliament on matters related to the gas sub-sector. According to circular no. 6/2017, the Committee will assess the modalities of production sharing agreements, policy and legislations, with the aim of recommending policy, institutional, and regulatory reforms necessary to maximize the benefits of the sector to the nation. The circular is a public document on the Parliament website.
The Ibrahim Index 2017 shows a slight rise of Tanzania’s overall governance index. The eleventh edition of the Ibrahim Index of African Governance (IIAG), which was established by the Mo Ibrahim Foundation, places Tanzania’s overall governance on position 57.5 (out of 100) from a position of 57 in 2015. The increase may seem surprising considering all negative commentary on governance over the last year. The development in fact continues the steady increase in the IIAG during the last decade.
Also good news was a report by TWAWEZA presented November 22 saying that five out of six Tanzanian citizens think that corruption has declined compared to what it was five years ago. Only nine per cent of the population now say that corruption cannot be reduced as compared to 51 per cent in 2014. Download the full Twaweza report here.
Grass root initiative and optimism for building local business on oil and gas, thus boosting local content emerges from a small blog post 13 November. Hussein Boffu recommends “How to get potential clients in oil and gas in Tanzania and East Africa using cold emailing”. Unfortunately there are many regulatory and administrative blockages for the budding entrepreneurs wanting to build local content. Some issues are upon focused on by our Petrostate Programme in a brief paper by Jesse Salah Ovadia about the implementation of Tanzanias local content policy. He argues that there is a “need to replace overlapping institutional authorities by clear lines of regulatory authority…”
Industrialization is dependent on research. Former Prime Minister Mizengo Pinda last week advised the government to invest more in research via institutions of higher learning in a bid to speed up its industrialization drive.
A study by Tarway-Twalla, A. K. on Liberia says that proactive procurement, monitoring and evaluation activities are principal mechanisms for addressing Illicit Financial Flows (IFFs) in Liberia’s Extractive and Renewable Industries. Procurement, monitoring and evaluation also links up with the focus on local content in extractive industries. Some conclusions could give interesting policy input for the upcoming petro industry in Tanzania.
Mnazi Bay turns losses into profits. Wentworth managing director says the company is able “to take full advantage of increasing gas demand in Tanzania from the electrical power generation and industrial demand and reduced gas volumes supplied into the transnational pipeline by peers.” Also. “There is near-term incremental gas demand expected from the start of the commissioning of the newly constructed, government owned, Kinyerezi-2 power station and commencement of gas fired power generation at the Dangote Cement plant” Production shares at Mnazi Bay is shared between Wentworth, Maurel & Prom and TPDC. Our Petro Data Hub now contains monthly gas production data from 2004 to July 2017.
Mozambican government downplays the impact of the October attacks in Mocambique’s planned LNG project site Mocimboa da Praia. The small port town 80 kms south of the Palma LNG site came under attack from Islamic extremists 5 October. During the 24 hour fight two policemen and 14 of the attackers died and a local community leader was killed.
The IMF in a study makes mention of the Central Corridor transport program across Burundi, DR Congo, Rwanda, Tanzania, and Uganda. The USD18 billion project involving local and international actors from the public and private sectors is a noteworthy African PPP project. In the study on “Trends and Challenges in Infrastructure Investment in Low-Income Developing Countries” the IMF concludes that “given the scarcity of resources, improving administrative capacity and investment efficiency is paramount. In addition, a major increase in private sector involvement is essential and requires concerted efforts to improve the regulatory and macroeconomic environment as well as complementary actions by multilateral development banks to provide risk mitigation and technical assistance”.
Africa’s youngest Billionaire is from Tanzania! Tafline Laylin in “The Daily Dose” blogspot interviews the 42 year old “Mo” Dewji CEO of the MeTL Group. The firm has expanded from the original import/export business to include manufacturing, agriculture, finance, real estate etc. The firm’s value in 2016 was USD 1.5 billion, and it now employs 28000 people.
Dewji’s company does in part rely on natural resources and is bound to have an environmental impact. MeTL’s subsidiary, Star Oils owns and operates approximately 200 gas stations in Tanzania. Every gallon of gasoline burned emits 19.6 pounds of carbon dioxide that contributes to climate change. MeTL has however made several changes to reduce its carbon footprint. Dewji insists they remain vigilant, open to and searching for other ways to be more environmentally responsible.
The East Africa Oil and Gas Summit takes place at the Intercontinental in Nairobi 14-15 June, 2018
The Tanzania Petrostate Programme Blog is produced by the a joint programme of three institutions: REPOA and the NBS in Tanzania, and CMI in Norway. The purpose of the blog is to draw attention to publications and reports on the gas and petroleum sectors which may be of interest to researchers, politicians and the general public. The blog does not state opinions but merely links to relevant postings on the world wide web with a brief description and/or quotes of the opinions stated by authors.
The Petrostate Programme runs a website at http://www.tanpetstate.org/ where the participating institutions and researchers are presented and the aims of the programme, research results and publications are posted. The programme is also gradually building up a Resource Hub (http://data.tanpetstate.org/) where researchers and other users can download important statistics and information pertaining to the petro sector and its effect on the Tanzanian economy and society. The database covers 20 categories including production and sales of petroleum products, environmental issues, poverty, public budgets etc.
The programme and its cooperating institutions are extremely grateful for constructive comments, advice on the blog and website as well as information on important web posting that deals with the petro sector and its role in Tanzania.