Investors still upbeat of gas economy, launch common tender template

29Jan 2016
The Guardian
Investors still upbeat of gas economy, launch common tender template

Despite the persistent depressed oil prices, Tanzania still excites sectoral investors who so far have led to discovery of 55 trillion cubic feet (tcf) of gas and are upbeat of a bright future for the industry owing to the country’s huge hydrocarbons potential.

Statoil, ExxonMobil Strike Gas Offshore

The investors expressed the optimism in the country’s oil and gas economy yesterday in Dar es Salaam during the launch of a pre-qualification system for service providers to the industry.

“With up to 55 trillion cubic feet of natural gas reserves, Tanzania is being viewed by many operators as an exciting new territory even at a time of depressed oil prices,” BG Tanzania and Statoil Tanzania AS said in a statement.

As part of a proactive, long-term strategy, the two companies have formed a consortium with Achilles – a global supplier information firm – to design a common supplier pre-qualification system in Tanzania. The statement said the template will be used as the preferred mechanism to identify and select suppliers and service providers for opportunities emerging in the country’s oil and gas economy.

Tanzania has made significant offshore gas discoveries during the last two years. The discoveries in Tanzanian and Mozambican waters have led to predictions the region could become the world's third-largest exporter of natural gas.

According the IMF, annual revenue collections by the government from the industry could reach between US$3 billion and US$6 billion at full production. That amounts to 6.6trn/- and 13.2trn/- respectively at the current exchange rate.

The global financial prefect says most of the fiscal revenues would originate from upstream activities. There have been fears that the unprecedented fall of oil prices in contemporary times would affect investment in the emerging gas sector in the country and deter exploration activities.

Global oil prices have fallen over 70 per cent since mid-2014, while other commodity prices such as gold and copper have also taken a dive. A barrel of crude oil has been sold to less than US$28 this month with fears rising it could even go below US$20.

“Suppliers wishing to provide services to the oil and gas industry in Tanzania are being offered a new route to market their expertise to the world’s biggest operators, ahead of potential multi-billion dollar project development opportunities in the country,” the joint statement said.

According to it, the consortium has agreed a single pre-qualification questionnaire with common standards that suppliers must achieve to be considered for business opportunities with the operators. In the first stage, oil and gas firms will invite existing, in-country suppliers to provide required information on their business position on areas such as health and safety, compliance, environment and Local Content Development.

This will feed into an accurate, up-to-date supplier database.

With a clear picture of resourcing, skills and compliance levels in the region, operators will be able to identify suitable suppliers, develop supply chain capacity when needed, ensure the highest standards in business critical areas and address requirements within Local Content Development – sharing benefits of contracts with local communities. Further, with a single registration, suppliers can be considered for work with any buyer in the consortium.

Gareth Palmer, Regional Director, Middle East and Africa for Achilles, which works on behalf of 200 oil and gas buying organisations across the globe to manage supplier risks said: “By implementing and using the same online system, BG and Statoil are making it as easy as possible for local suppliers to gain a ‘shop window’ with operators before opportunities arise.”

Derek Hudson, the President and Asset General Manager for BG East Africa said that supporting local content makes business sense hence the effort to provide the initial investment needed to develop and establish the new system in Tanzania and the region.

“Through this system, we hope to identify, nurture and unleash the potential to work with more Tanzanian producers and suppliers,” he noted.

His counterpart at Statoil Tanzania, Øystein Michelsen said the collaboration will support growth of local companies and contribute to the economy in Tanzania.

“We are delighted to see the supplier database system is coming to fruition and that suppliers and service providers in Tanzania will have an open and transparent platform in which they could access the opportunities emerging from the sector,” the Statoil Country Manager added.

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