Tanzania gearing up to capitalize on East African hydrocarbons bonanza
In a surprise announcement, Tanzania has beaten out Kenya in a race to carry land-locked Uganda’s oil to international markets. The Ugandan government in Kampala, had been expected to follow through with a previously mooted proposal to link its oil rich western province around Hoima to Kenya’s north coast port of Lamu, but has now backtracked, deciding to join forces with Tanzania instead.
Now the green light has been given for a ‘southern route’ comprising a 1,410-kilometre heated pipeline from Hoima to Tanzania’s deep water port at Tanga on the Indian Ocean. Heavy lobbying by international oil majors, a newly elected ‘business-friendly and action minded’ presidency in Tanzania and an increasingly unraveling and fragile security landscape in Kenya have all been touted as reasons for the sudden change of heart.
French oil and gas multinational, Total, which possesses a 33% stake in four blocks in the Lake Albert region in Uganda where oil has already been found, says work will begin with immediate effect on the construction of the newly branded Uganda–Tanzania Crude Oil Pipeline (UTCOP) with Vice President of Total East Africa, Javier Rielo, declaring that the company expects to invest “as much as USD 4bn on the project.”
The news cements Tanzanian’s claim to be one of the lead protagonists in an East African oil and gas bonanza that promises to transform the region’s economic profile. As recently as February, Tanzania, known for its prowess in mining, but a relative newbie to hydrocarbons development, discovered an additional 2.17 trillion cubic feet of possible natural gas deposits, raising the east African nation’s total estimated recoverable natural gas reserves to in excess of 57 tcf. Were discoveries to continue at their current tempo the country could be looking at as much as 200 trillion cubic feet within only a couple of years.
Commentators warn, however, that converting this natural resource wealth into national prosperity “will not happen overnight.” Most of the petroleum hydrocarbons discovered to date constitute dry gas resources, located deep offshore thus carrying significant complications with regard to commercialization. “This is not only due to the physical characteristics of gas that necessitate setting up of the comparatively expensive and technically demanding liquefaction and re-gas facilities, but also because the pre-completion phase (i.e. first LNG cargo) takes longer to come on-stream, than in oil extraction,” explains one analyst.