MINISTRY OF OF ENERGY AND MINERALS

DRAFT NATURAL GAS POLICY

Presented By: Norbert. A. Kahyoza

Assistant Commissioner for Natural Gas

OUTLINE

• Introduction• Contents of the Draft Policy• Background Information and Challenges• Key Issues and Statements• Legal and Regulatory Framework• Institutional Framework• Conclusion

Introduction

Natural gas resource belongs to the people of Tanzania, and must be managed in a way that benefits the entire Tanzanian society

Dedicated policy needed to guide operations so as to realize these benefits.

This Policy shall provide a comprehensive framework for development of the natural gas industry to ensure maximum benefits to the national economy.

Contents of the Draft PolicyThe policy document consist of five chapters in accordance with the guidelines for preparation of Cabinet papers;•Chapter One: Provides the background information including the current situation and challenges the industry is facing.•Chapter Two: Gives the justification for a new policy and the vision, mission and the objectives to be achieved.•Chapter Three: Provides detailed description of the identified policy issues, objectives and policy statements and cross cutting issues.•Chapter Four: Provides guidance on the requisite Legal and regulatory framework•Chapter Five: Suggests Institutional framework and the approach to monitoring and evaluation.

Background Information and Challenges

• Endowment – Sufficient resources for strategic development; 32 TCF (about 6 billion barrels of oil equivalent – BoE)

• Exploration activities:– Done by contracting foreign multinational companies

with requisite skills, technology and adequate financial resources.

– 26 agreements involving 18 companies have been signed so far,

– These activities are capital intensive, risky and require highly specialized skills.

Background Information and Challenges - Cont.

• Achievements:– Discoveries; Songo Songo (1974), Mnazi Bay

(1982), Mkuranga (2007), Ntorya (2010) and in the deep sea offshore Tanzania between 2010 and 2012.

– Natural gas from Songo Songo and Mnazi bay have been commercialized.

– Deep sea discoveries is significant, could transform the Tanzanian economy

Background Information and Challenges - Cont.

• Challenges: – Policy, legal and institutional frameworks to

administer the vibrant industry effectively; – Adequate human resources with the requisite

skills and knowledge in the natural gas industry; – Adequate infrastructure for natural gas supply;– Promotion of domestic market for natural gas;– Effective natural gas revenue management;– Consideration of health, safety and environment; – Management of expectations.

Key Issues and Statements

• The main objective is to provide guidance for ensuring that benefits from the natural gas value chain are maximized for effective transformation of the Tanzanian economy

• There are 10 specific objectives addressing specific challenges

• Policy statements are formulated to tackle challenges along the natural gas value chain

Key Issues and Statements, Cont.

• Upstream activities: exploration, appraisal, development and

production stages of oil and gas operations,Detailed policy issues will be addressed under

Petroleum Upstream Policy.

• Midstream and Downstream activitiesinvolves gas processing, liquefaction,

transportation, storage, regasification, distribution and other ancillary services.

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Key Issues and Statements, Cont.Infrastructure development:

Strategic participation Non-discriminatory access

Emphasis on domestic usage: Develop and serve the domestic marketPromote usage of natural gas products (Liquefied

Petroleum Gas (LPG), Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGL) for domestic market);

Establishment of industrial parks for natural gas industries.

Key Issues and Statements, Cont.Recognizing LNG for export:

Promoting and supporting local participation in the LNG handling business,

LNG facilities are located onshore wherever possible through common facilities

ensure domestic market is given first priority over the export market;

Key Issues and Statements, ContLocal content and capacity buildingRefers to added value brought to Tanzanians

measured and undertaken through employment and training of local workforce; investments in developing supplies and services locally; and procuring supplies of services locally;Developing capabilities of Tanzanians to participate

strategically Strengthening capacity of national company Establishing oil and natural gas center of excellence

Key Issues and Statements, Cont

Key Issues and Statements, Cont

Key Issues and Statements, Cont

Legal and Regulatory Framework• Existing Legal and Regulatory framework for

energy sector does not address comprehensively the governance of the natural gas industry

• Dedicated legislation needed to address matters of licensing, tariff structure, rates and charges, quality and standards, healthy and safety issues, access to common infrastructure and services, revenue management and related aspects of natural gas industry.

Institutional Framework

• Need for an institutional framework that articulates major roles of key institutions and direction towards a transforming the economy and sustainable development.

• The Institutional framework foreseen includes the following;– The role of the Government– The role of TPDC

CONCLUSION• Determination to build capacity for national company

responsible for oil and gas and to ensure Tanzanians participate strategically in the natural gas value chain.

• The ultimate goal is to contribute towards improving the quality of life of Tanzanians at present and in the years to come.

• This could be achieved through a mechanism which balances domestic and export markets and attracts foreign investment.

• A linkage of the natural gas industry with other sectors is considered to be of paramount important.

• This policy document is supported by a Strategy to ensure effective implementation towards facilitating social and economic transformation of Tanzania to become a middle income country by 2025.

THANK YOU

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