we need these corporations and the international oil market but we can not leverage our hands when we are disorganised.
we saw predatory UN aid agencies during the civil war, prepare for the next stage of usury.
I believe we should should adopt laissez-faire attitude towards companies initially but our long term should be Protectionism
the only way to keep these companies in check is by having pressure groups within the countries they originate from.
A political row over contracts to extract some of Tanzania’s extensive natural gas reserves – culminating with the arrest of two state officials this week – threatens to complicate and delay billions of dollars of investment into the sector.
Foreign companies including ExxonMobil of the US, Norway’s Statoil and BG Group and Ophir of the UK have reached agreements with Tanzania’s government to exploit the reserves.
But on Monday two senior officials at the state-owned entity that partners with the energy companies were arrested for refusing to comply with demands from Tanzanian lawmakers to release details of 26 contracts, known in the industry as “production sharing agreements”. Zitto Kabwe, head of the parliamentary committee that ordered the arrests and a member of Tanzania’s opposition, said that parliament had the right to access the contracts.
The chairman and director-general of the Tanzania Petroleum Development Corporation, who play a key role in negotiating with foreign companies, were later released by police after several hours in detention.
However, the quarrel will only add to delays in publishing key legislation for the gas industry and to worries over controversial plans to introduce a new constitution ahead of 2015 elections, when president Jakaya Kikwete is due to step down.
Industry executives in Dar es Salaam, the commercial capital, are already worried about the impact of the political climate. “The delays over the new constitution, the elections, the lack of clarity around the gas policy is really holding back decisions from oil companies,” said one gas executive in the east African country.
The energy groups have yet to make final investment decisions and production in Tanzania is still many years away, potentially more than a decade.
Analysts believe the companies are increasingly likely to postpone their final investment decisions until after next year’s elections. That would mean Tanzania falling even further behind neighbouring Mozambique, which hopes to start exporting gas in 2018 after discovering large offshore reserves.
Opposition lawmakers, meanwhile, are refusing to drop their campaign for greater transparency in the industry which has intensified since a contract, purportedly showing new terms with one foreign energy company, was leaked earlier this year.
Tanzania gas map
Mr Kabwe, the opposition lawmaker, said transparency would help determine if the government was getting its fair share of potential revenues, whether and why contracts differ between agreements, and whether any bribes may have been paid to secure the contracts.
“So far these are all mere allegations – we are not sure who paid what – the next step is auditing of the contracts,” he said.
Tanzania is seen by the energy industry as a country with great potential. But executives point out that early entrants took big risks exploring an unproven sector and, therefore, were able to negotiate more favourable terms than later entrants.
Tanzania-based analysts said the tussle is set to continue, with the contracts playing a political role. “If the contracts are out in the open people will make a lot of noise and they will have to be renegotiated . . . it is a time bomb,” one said.
Tanzania is not the only east African country struggling with the development of its nascent hydrocarbons industry. Uganda has spent years negotiating a deal with foreign groups to develop vast new oilfields, including the construction of a refinery near Kampala, the capital, and a pipeline through neighbouring Kenya to the Indian Ocean.
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