Tanzania 2014 | ENERGY | INTERVIEW

TBY talks to Yona Killagane, Managing Director of Tanzania Petroleum Development Corporation (TPDC), on recent gas discoveries, current operations, and achieving the goals of Vision 2025.

Yona Killagane
Yona Killagane is the Managing Director of Tanzania Petroleum Development Corporation (TPDC)

In 1999 and 2000, petroleum surveys led to most of the contracts going to currently active private companies. How important is exploration for the future of the country?

Our responsibilities center on exploration activities to determine whether we can discover sufficient oil reserves. Over the past three years, we have discovered significant volumes of gas, amounting to around 41.7 trillion cubic feet (tcf) of reserves. We would like more companies to undertake exploration, so that we can discover further gas reserves, and potentially oil as well.

How can the country develop its natural gas resources, while spreading the benefits of that development equitably and having a net positive effect on the population?

The government's key objective is to ensure that reserves are primarily directed to domestic consumption, although we are also looking into exporting LNG. We believe that local energy supply shortfalls will cease once we start exploiting new gas reserves, as the bulk of them will be directed internally. The local production of fertilizers, methanol, and plastics is expected to develop as a result.

Minister Muhongo and the Commissioner for Minerals both touched on the government holding a stake in hydrocarbon projects. What kind of stake would TPDC take?

It is difficult to speculate on what percentage we will retain. The resources belong to Tanzania, meaning it must retain a substantial stake in them. When it comes to production set to arise from natural gas, we would like to participate in this too, but that will depend more on how much we manage to finance it, as you cannot insist on, say, a 90% stake unless you can finance such capital-intensive projects.

How has the recent gas bill changed the way you do business, and how might constitutional reform affect your business?

Currently, the government is working on natural gas policy, an instrument that will help the private sector by clearly defining the government position. It will also stipulate the framework within which companies will have to work. Constitutional reform is at the draft stage, so it's too early to comment realistically.

The Mnazi Bay Gas Field was quite a discovery for Tanzania. How is work progressing on that front, and could you give us an expected timeline for project development?

Production at the Mnazi Bay Gas Field commenced in 2006, but as a very small-scale operation. Today, we are generating about 12 MW of power, although the infrastructure could be expanded to 350 MW. We are laying a pipeline from Mnazi Bay, which will bring gas to Dar es Salaam, where our turbines currently use liquid fuel, but could easily be converted to gas. Given that Tanzania is currently losing about $1 billion a year through fuel imports, this is a critical project for the national economy. Initially, the gas from Songo Songo and Mnazi Bay will power the turbines in Dar es Salaam.

How will the TPDC help to achieve the Vision 2025 goals?

In order to achieve these goals, the essential element is power, most quickly produced via natural gas. This is why the government is prioritizing the pipeline project, to reach the required capacity by adding more turbines. Secondly, the advent of gas will facilitate the development of a range of industries that will further contribute to the economy. One of the resulting products, fertilizer, is crucial for agriculture, and they will be produced as the chemicals industry evolves. This confirms the many positive developments set to come from gas. At the end of 2013, we will be holding a tender offering potential investors the opportunity to bid for the exploration rights at seven deep-sea blocks and one in Lake Tanganyika. The process was launched on October 25, 2013, and end on May 15, 2014.