Picking up the Slack: Kenya and Tanzania's Energy Sectors
| Date | 01 August 2020 |
| Published date | 01 August 2020 |
| Pages | 223-227 |
| DOI | 10.3366/gels.2020.0032 |
Tanzania has steadily developed its natural gas sector and following its 2014 domestic commercialisation is now embarking on the Tanzanian Liquified Natural Gas Project (TLNGP). In 2012 Tanzania began developing its natural gas fields in the Lindi Region, and in 2014 produced 19 billion cubic feet (Bcf) of natural gas- this initial development coupled with the Mtwara- Dar Es Salam Natural Gas Pipeline supply LNG for domestic electricity production as well as usage for cooking.
Following the 2017 amendment to the Natural Wealth and Resources Contracts law, the Tanzania government began contract renegotiation. The companies operating in the LNG scene include Equinor (operator) and ExxonMobil for block 2; Shell (operator), Ophir Energy and Pavilion Energy for Block 1 and 4. As from 2014, Tanzania started negotiations with firms to develop and operate the TLNGP the initial plan was to reach a final investment decision in 2020- but these plans have hit a snag due to the COVID-19 Pandemic. Kenya announced commercial quantities of crude oil in 2010, since then the Kenya Joint Venture: composed of Tullow Kenya, Africa Oil and Total has conducted exploration and appraisal and in 2020 intends to reach a final investment decision. In a bid to fully develop the South Lokichar Upstream Project Kenya plans on building a heated underground crude oil pipeline- the Lokichar-Lamu Crude Oil Pipeline (LLCOP). Additionally, Kenya is constructing a 32- berth port in Lamu that will have a berth dedicated to the sector.
Non-transformations revenues: In this age of climate change awareness and the shift to renewable energy and technological development, it is evident that fossil fuels will not be as valuable as previously expected. According to a 2019 NRGI analysis, the earliest Tanzania will earn LNG revenues is 2027 and government revenues will amount to approximately 2.9 Billion US Dollars per annum – representing less than 2% of GDP. This already dims the prospect of windfall revenues for the country; thus, a robust public fiscal regime ought to be implemented, and decisions should not be pegged to the sector.
Due to the 2020 COVID-19 Pandemic- and Tanzania's controversial public health approach- it is expected that the country will experience a relatively long economic slow-down and companies will scale down operations for the whole of 2020. This serves...
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