Petrostate Blog for the period 22.01.2018 to 04.02.2018

Natural gas, oil and energy sector:

A briefing by natural Resource Governance Institute (NRGI) uses newly released data on in-kind payments made to governments by oil and gas companies for the right to extract natural resources. The briefing reveals that in-kind payments made to national oil companies (NOCs) in the form of physical oil and gas can account for the majority of the overall payments that these companies make to governments in order to extract resources. While these in-kind payments received by NOCs are large, the Resource Governance Index (RGI) shows that many NOCs in oil-producing countries score poorly in indicators that assess their governance and disclosure practices in relation to the sale of these important state assets of oil and gas.

 

Gas, coal and renewable energy were all in competition last year as the global economy improved. Gas demand rose 3% in the first three quarters of 2017, compared to the same period in 2016, thanks to China and Europe.

 

Tullow and Ghana Gas have shut facilities for upgrades, meaning no offshore Ghanaian gas is currently flowing to power plants onshore.

 

The Thai company PTTEP January 26 reported a net profit at $594mn for the year 2017, up by more than 60% driven by improved energy prices. Their Mozambique LNG production plan projects about 12 million tonnes of LNG annually from a plant to start producing in 2023. The gas-field project has already secured long-term contracts for 8 million tons of LNG a year. As for the land-based LNG production plant, Anadarko has already selected a construction contractor; construction of the plant is expected to begin soon.

 

Oil markets have entered a new era of competing producers and abundant supplies, according to a new paper by two experts from BP and the Oxford Institute. There is however disagreement about the abundance of oil.

 

Australia and AIM-listed explorer Tlou Energy has provided an update on its coalbed methane (CBM) prospects in landlocked Botswana.

 

China’s coalbed methane output in December was 0.64bn m3, up 8.5% year on year, according to latest data published by country’s statistics department

 

China imported 5.03 million metric tons of LNG last month, up 24% year on year.

 

 

Other Mining:

Acacia, Tanzania’s No.1 gold producer said it had bought $2 million worth of options that protect it against lower gold prices in a fresh effort to offset the impact of a government ban on concentrate exports. Options are used by miners to guarantee prices of their future output. They give companies the right to sell their upcoming production at a fixed price at a specified time. Acacia has presumably taken the step because it is awaiting a final agreement between Barrick and President John Magufuli to resume exports from the Eastern African country. Since March last year Tanzania has had a concentrates exports ban including on gold which represents about a third of Acacia’s output.

 

Solo Oil PLC (LON:SOLO) saw its shares rise after it updated investors on the progress of its 15% owned associate Helium One which is considering options for new funding to support exploration plans in Tanzania. An initial public offering (IPO), on the Australian Securities Exchange, is one option being considered by Helium One and it has now appointed Australian stockbroker PAC Pty to help it review this potential outcome.

 

In partnership with the Geology Department of the University of Dar es Salaam (UDSM) and Oxford University, Helium One organized a one-day workshop at UDSM to build local capacity of helium in Tanzania. Speaking at the workshop, Helium One’s Chief Executive Officer, Thomas Abraham-James said: “Helium One believes there is an opportunity through helium exploration and development to develop world-class technical skills and scientific expertise locally in Tanzania. We continue to build on our partnership with UDSM through knowledge-sharing, training for students and Ministry of Minerals’ staff, and development of a scholarship programme”.

 

Economy:

The World Economic Forum (WEF), through its Inclusive Development Index (IDI), has listed Tanzania the top in inclusive economy among African countries in 2018. It ranked the country the 48th in worldwide grading. Speaking in an exclusive interview with the ‘Daily News’, the Executive Secretary of the National Economic Empowerment Council (NEEC), Ms Beng’i Issa, mentioned factors that propelled Tanzania to the top as local ownership of businesses and availability of social and financial services.

 

Reuters reports that “Mining, Natural Gas spur Tanzania’s Economic Growth”. The International news agency says that “faster growth in mining, natural gas and construction activities propelled Tanzania’s economy. The National Bureau of Statistics (NBS) points out that growth in the mining and quarrying sector was largely driven by an increase in natural gas production, diamond and coal output. Big gas discoveries offshore – still several years away from major exports – have drawn in more investors, both in the energy industry and other sectors looking to find a foothold in an expanding market.

 

The President of the African Development Bank, Akinwumi Adesina, has made a compelling case for accelerating Africa’s industrialization in order to create jobs, reduce poverty and promote inclusive economic growth.

 

East Africa:

Kenya and Tanzania have agreed to put an end to trade dispute, preparing for an increase in intra-East Africa Community (EAC) trade. Both countries have had unsatisfactory trade relations during the last few years, dropping Kenya’s exports to Tanzania by 60 percent in the first six months of last year.

 

Mozambique:

The World Bank is lending $97mn to the refinancing of the 175 MW Ressano Garcia gas-fired power plant in southern Mozambique, so that it can more than double in size to some 400 MW

 

Meanwhile, Statoil of Norway has relinquished its interest in the Area A5-A offshore license awarded to it and two others in 2015 by Mozambique

 

 

The Aid Scene:

The EU will continue to collaborate with the Ministry of Energy in facilitating the development of a National Energy Efficiency Strategy. This will be done through the EU Technical Assistance Facility for the Sustainable Energy for All (SE4All) initiative – Eastern and Southern Africa.

 

Norway’s Conservative Party takes a stronger grip on development policy, appointing one of its top politicians, Nikolai Astrup, to be the party’s first Development Minister. The appointment is part of a government reshuffle, where the Liberal Party joins the minority government.

 

 

Politics, Other:

Upon taking office in October 2015, President John Pombe Magufuli committed to stamp out corruption. The Human Rights Watch World Report 2018 however reports that there have been has restrictions on basic freedoms through repressive laws and decrees. Critical journalists, politicians, human rights defenders, civil society activists and senior United Nations officials have faced various threats, intimidation and arbitrary detention by government authorities.  While the government made some progress in expanding access to free secondary education, it reinforced a discriminatory ban against pregnant students.

 

President John Magufuli has placed a stop on all registration of new ships “until further notice”, following the recent seizure of two vessels flying the country’s flag which were carrying illegal cargo.

 

Statistics:

Tanzania’s mining local content regulations are finally out, The Constitution and Legal Affairs minister Palamagamba Kabudi submitted the regulations to Chief Secretary John Kijazi at the state house .The regulations are ready for use following the passing amendments of the Mining Act early 2017. The regulations are however not yet available for public/wider use yet. The Petrostate Programme’s brief on local content issues in the mining sector may be found here.

 

The National Accounts of Tanzania Mainland 2008-2016 with GDP at constant 2007 prices was published in November 2017. The accounts have adopted the United Nations system of National Accounts – SNA 1993 and partly SNA 2008 that makes it possible to compare the Tanzania national accounts aggregates with other countries. The 2nd quarter report of Gross Domestic Product for the year 2017 shows a slowdown in growth. GDP was TZS 12.8 trillion compared to TZS 11.9 trillion for the corresponding quarter of 2016, equivalent to a growth rate of 7.8 percent in 2017. This compares to a revised growth rate of 8.5 percent observed in the corresponding quarter of 2016.

 

The 2016 National Accounts are accessible here. Q1 2017 figures may be found here and Q2 2017 figures here.

 

Article on spatial inequalities and natural resources:

Elise Must in an article in African Affairs, Volume 117, Issue 466, 1 January 2018, Pages 83–108, analyses “Structural inequality, natural resources and mobilization in southern Tanzania  The article investigates when and how spatial inequalities and natural resources spark conflict. Based on semi-structured interviews and new survey data, it finds that natural resource mismanagement and subsequent leadership increased the salience of a regional identity and exacerbated felt group grievances in southern Tanzania. A feeling of injustice was particularly salient in motivating riot participants.

 

Future events:

Datacloud Africa is focused on investing, powering, connecting, and deploying data centres across the continent.   The one-day event will recognise the challenges for Africa’s digital economy and growth this forum establishes for the first time a unique opportunity for companies engaged in creating new IT ecosystems that will drive growth, their investors and financiers to meet, network and collaborate.

Location: Four Seasons Resort Marrakech Dates: 28-Sep-18 to 28-Sep-18

 

 

The Tanzania Petrostate Programme Blog is produced by the 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 content and opinions stated by authors.

 

 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.

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