Overview of Oil and Gas in Tanzania
Tanzania is endowed with diverse energy sources including biomass, natural gas, hydropower, coal, geothermal, solar and wind power, much of which is untapped. Wood-fuel accounts for up to 92% of total energy supply with about 2% from hydro-electricity and 7% from oil-derived products.
Nonetheless the downstream oil industry is an important sector of the country’s economy absorbing on average 55% of the country’s foreign exchange earnings. Government policies are directed at petroleum product substitution by exploiting indigenous resources.
In the upstream oil industry, oil and gas exploration and production is also being encouraged. Extensive gas fields have been identified off the coast at Songo Songo and Mnazi Bay and these are in the process of being developed.
The hydrocarbon industry is regulated by the Ministry for Energy and Minerals, with upstream activities governed by the Petroleum (Exploration and Production) Act 1980 and the downstream activities by the National Investment (Promotion and Protection) Act 1990.
Tanzania, with its oil seeps, seismic and other data, shows strong hydrocarbon potential in its upstream oil industry sector. However, only 20 wildcat exploration and 8 development wells have been drilled in a 222,000 sq km area, and therefore Tanzania can be classified as underexplored.
Current natural gas reserves are estimated to be 2 trillion cubic feet (tcf). The government is working closely with the World Bank to develop the Songo Songo gas fields off the Southern Tanzanian coast and in the Mnazi Bay area, with a view to substituting expensive imported petroleum fuels. The Songo Songo gas-to-electricity project will have a ready market of 17 potential industrial users of natural gas in the Dar es Salaam area.
Companies currently conductiong oil exploration in Tanzania include: PanOcean Energy, Aminex plc and EnerGulf.