Friendly Fuel

Natural gas production and utilization heralds an era of cleaner, more efficient power for Africa and a potential financial windfall for Tanzania and Mozambique. Chairman of Tanzania Petroleum Development Corporation (TPDC) Professor Sufian Bukurura talks to AOP about how his country is trying to maximize the opportunity.

TPDC announced at the end of last year that the government saved $7.4 billion from 2004 through 2015 by using natural gas as a source of power. How were those savings achieved?

Currently natural gas is used to generate about 70 percent of thermal power for the national grid in Tanzania. This amount of power could ordinarily have been generated using imported heavy fuels, consequently, spending limited hard-earned foreign currency. By using natural gas instead of heavy fuels to generate power, quantifiable savings for the country in general and the national treasury in particular have been made.

What are the infrastructure and regulatory changes that are still to be made to maximize gas-to-power potential in Tanzania?

Tanzania recently enacted the Petroleum Act 2015 (PA 2015) and the Oil and Gas Revenue Management Act (OGRMA 2015). These legal instruments, among other things, lay out the regulatory framework for oil and gas in the country. It is, therefore, too early to judge their effectiveness.

What is the role of natural gas, as opposed to oil and coal, in meeting energy needs in Africa?

Natural gas is comparatively cleaner and environmentally more friendly than other fossil fuels. Globally, and on the African continent in particular, natural gas has added another dimension to power generation and ultimately to the global energy mix. It must be emphasized that the World Bank has, for example, been working with Nigeria and Russia (previously considered the worst performers in terms of gas flaring) to assist them in utilizing flared gas in power generation.

Where is Tanzania looking to in its bid to address deficiencies in human capital, expertise and local content policies?

The petroleum sector experiences shortage of human capital and expertise globally. Continuous training and capacity building is, therefore, a global imperative. In Tanzania, petroleum-related training has begun and has to continue relentlessly. Sections 218-221 of the Petroleum Act 2015 are first steps towards laying out local content requirements in the petroleum sector. It is expected that regulations drafted under the PA 2015 will further improve and clarify local content issues.

Commercialization of natural gas in Tanzania faces stiff competition from other countries. How is the country making its case for new investment capital?

Commercialization of natural gas is complex and competitive. Tanzania has the advantage of having established and experienced international oil companies, the likes of ExxonMobil, Shell and Statoil, to mention but a few, on board in regard to natural gas commercialization. These IOCs are not only partners in Deep Sea Blocks 1, 2 and 4, but they are also working together exploring the construction of a joint liquefied natural gas facility. They are also working together to identify financial resources for this investment, appropriate technology and marketing of the natural gas. These experiences and strengths should work well for Tanzania. Incidentally, the geographical positions of Tanzania and Mozambique, in relation to the Asian markets for LNG, is more of an advantage — and makes these two countries more collaborators than competitors.

Prof. Sufian Hemed Bukurura

Prof. Sufian Hemed Bukurura is Chairman of the Tanzania Petroleum Development Corporation. Prior to his role at the national oil company of Tanzania he served as professor at the School of Law, University of Dar es Salaam. He previously taught in South Africa, at the University of South Africa in Pretoria and the University of Kwazulu-Natal in Durban; at the University of Namibia; at the University of Swaziland; and in Tanzania at the Institute of Development Management in Mzumbe. Prof. Bukurura was trained as a lawyer at the University of Dar es Salaam. He later pursued further studies in England at the Universities of Warwick and Cambridge.

Join the conversation on Capital Raising and the Gas Industry at the AOP Investor Forum in London, May 10, 2018