The government expects oil majors to make more large discoveries of natural gas in its deep-water offshore, with new finds hoped to lead to investment in liquefied natural gas (LNG) export plants, a senior official told Reuters on Thursday.
Tanzania, fast becoming an energy hub in the region, said it will launch a new licensing round this year for nine blocks in its south-east where major gas discoveries have been made.
"With more exploration and drilling, we expect additional natural gas discoveries to be made in Tanzania. The prospects for more large gas discoveries in the country's offshore region are very good," Yona Killagane, managing director of the state-run Tanzania Petroleum Development Corporation (TPDC), told Reuters in an interview.
"We expect to launch a new licensing round for nine deep-sea blocks sometime in September this year. Companies doing exploration work in the country can discover either more gas or oil."
Previous rounds held between 2001 and 2004 led to the licensing of eight deep-sea blocks to companies including Royal Dutch Shell, French oil group Total, Britain's BG Group, Norway's Statoil and Petrobas of Brazil.
The blocks to be offered are some of the 16 offshore blocks Tanzania said in March it planned to offer in a licensing round.
Killagane said more gas finds in Tanzania would boost investment in LNG plants to freeze gas for seaborne exports, as Asian demand continually rises and natural gas reserves in Europe dwindle.
"The discovery of vast natural gas reserves in our country will lead to investments in liquefied natural gas plants that can be built in onshore areas," he said.
The proximity of east Africa's second biggest economy to Asia makes it well positioned to reap the benefits of surging fuel import demand in Japan, China and India, enticing investors to fund export projects.
Tanzania said last month it had nearly tripled its estimate of recoverable natural gas reserves to up to 28.74 trillion cubic feet (tcf) from 10 trillion following recent major discoveries.
Killagane said the government expects to complete construction of a major 532 km long gas pipeline project from the south of the country to the commercial capital Dar es Salaam in the next 18 months.
Tanzania signed a $1.2 billion loan agreement with China in September for the construction of the 532-km pipeline.
"The price differential between using our own natural gas reserves to run power plants and factories as opposed to oil imports means that we are saving around $1 billion a year," said Killagane.
The country plans to have in place a new legal framework by the end of the year to regulate the fast-growing gas industry and avoid potential disputes with investors.
"The government plans to unveil a gas policy and gas utilisation master plan towards the end of this year, possibly in October. The main objective of this is to guide the sector, so investors know exactly how they will proceed with their investments," he said.
Tanzania's energy ministry has been locked in talks with the country's largest gas producer - PanAfrican Energy, a unit of Toronto-listed Orca Exploration - over payment of $33 million that the government says is a legal obligation.