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Tanzania's troubles over gas revenue

Sharing the spoils
Sep 9th 2014, 16:13 BY C.O. AND .B. ! DA" S SA#AA$
A #A%D &ontra&t 'et(een Nor(a)*s Statoil an+ the ,an-ania .etrole/0 De1elop0ent
Corporation 2,.DC3 is raising 4/estions a'o/t (hether ,an-ania (ill gain the 5/ll 'ene5its o5
its si-ea'le gas +eposits, the 5irst o5 (hi&h (as +is&o1ere+ +eep in the 6n+ian O&ean in
2010. sti0ates p/t the &o/ntr)*s reser1es at a little o1er 70 trillion &/'i& 5eet o5 gas, a
5ig/re the go1ern0ent thin8s 0a) +o/'le as a++itional e9ploration (ells are +rille+, 0a8ing
the0 potentiall) a &onsi+era'le potential so/r&e o5 re1en/e.
Arg/0ents o1er ho( s/&h re1en/e sho/l+ 'e share+ 'et(een the &o/ntr) an+ oil 5ir0s
ha1e alrea+) spille+ o1er into p/'li& +e'ate. #ast (ee8 ,an-ania:s re1en/e a/thorit) sai+ it
(o/l+ re1ie( an+ renegotiate 0ining an+ gas agree0ents. A 5e( +a)s later it 4/i&8l)
(ith+re( that proposal a0i+ &on&erns that it 0ight ha0per in1est0ent an+ e9ploration.
,he '/l8 o5 the ,an-anian gas in+/str) is still in its e9ploration phase, an+ 5inal in1est0ent
+e&isions on pro+/&tion are /nli8el) to 'e 0a+e /ntil 2017 or 2016. B/t a&&or+ing to an 6$;
report release+ in April, on&e in5rastr/&t/re is in pla&e an+ pro+/&tion is /n+er (a), ann/al
re1en/e &olle&tions &o/l+ range 'et(een <3 'illion an+ <6 'illion.
=o(e1er, these pro>e&tions &o0e (ith a great +eal o5 /n&ertaint), an+ not >/st 'e&a/se o5
5l/&t/ating gas pri&es. ,he .ro+/&tion Sharing Agree0ents 2.SA3 that ,.DC is 0a8ing (ith
'ig international 5ir0s li8e British ?as, .etro'ras an+ Shell are all &on5i+ential. ,o &al&/late
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potential pro5its, the 6$; /se+ the go1ern0ent*s 0o+el .SAs, (hi&h pro1i+e general
g/i+elines 5or these &ontra&ts, in&l/+ing +egrees o5 pro5it sharing.
6n $a) part o5 one o5 these &ontra&ts (as lea8e+ online. ,his (as a &ontra&t (ith Statoil, an
oil@an+@gas &o0pan) that is 0a>orit)@o(ne+ ') the Nor(egian go1ern0ent, an+
99on$o'il, (hi&h has a 0inorit) 37A share in the li&en&e. A 2012 a++en+/0 to an
e9isting agree0ent 'et(een Statoil an+ the ,.DC, the &ontra&t +i55ere+ signi5i&antl) 5ro0
the 0o+el agree0ents that ha+ pre1io/sl) 'een 0a+e p/'li&. ,he lea8e+ +eal s/ggests that
,an-ania (o/l+ get 30@70A o5 the Bpro5it gasC 2a5ter &osts are &o1ere+ an+ ro)alties pai+3
rather than the 70@D7A spe&i5ie+ in the 0o+el agree0ents. ,he 0one) is inten+e+ to 'e
pai+ into a so1ereign@(ealth 5/n+, (hi&h has )et to 'e set /p.
Base+ on the 21 trillion &/'i& 5eet o5 gas that is tho/ght to e9ist in the e9ploration 'lo&8
&o1ere+ ') the agree0ent, opposition &riti&s ha1e &al&/late+ that the +i55eren&e in ter0s
&o/l+ lea+ to <12 'illion less re1en/e 5or the go1ern0ent o1er the e9pe&te+ 17 )ear li5e o5
the pro>e&t. ,he ,.DC +isp/tes this, sa)ing that ,an-ania (ill &olle&t 61A o5 pro5its on&e
&orporate ta9es are in&l/+e+, pl/s 7A ro)alties. ,he +i55eren&e 'et(een the a++en+/0 an+
the 0o+el agree0ent, the) sa), is +/e to ,an-ania*s la&8 o5 e9perien&e in &ostl) +eep@sea
e9ploration an+ the a'sen&e o5 in5rastr/&t/re, pri&ing 0e&hanis0s an+ an e9isting 0ar8et
5or ,an-ania*s nat/ral gas.
Statoil (on*t +is&/ss spe&i5i& +etails o5 its &ontra&t, '/t has sai+ that the +eal &onsi+ers the
totalit) o5 ta9es an+ rents, along (ith the spe&i5i& &hallenges an+ ris8s o5 the pro>e&t.
A&&or+ing to Statoil*s pro>e&tions, ,an-ania*s total share o5 the pro5its &o/l+ 'e 67@E7A. ,he
Nat/ral "eso/r&e ?o1ernan&e 6nstit/te 2N"?63, an in+epen+ent, non@pro5it organisation,
sa)s that the ter0s o5 the +eal see0 in line (ith international stan+ar+s. Altho/gh
go1ern0ent pro5it pro>e&tions see0 reasona'le, N"?6 anal)sts sa) that the a&&/ra&) o5
their report is hin+ere+ ') a la&8 o5 in5or0ation, spe&i5i&all) not ha1ing a&&ess to the original
&ontra&t.
,he N"?6 e&hoe+ the 6$; an+ others in &alling 5or in&rease+ transparen&) an+ p/'li&
+is&los/re o5 the ter0s o5 all .SAs. ,an-ania has &o00itte+ to p/'lishing all ne(l) signe+
e9tra&ti1e &ontra&ts, '/t agree0ents alrea+) e9ist 5or 0ost o5 the &o/ntr)*s nat/ral gas
'lo&8s, an+ this ne( &o00it0ent isn*t retroa&ti1e. So 5ar, onl) one other &ontra&t has 'een
0a+e p/'li&. 6n April, S(ala Oil an+ ?as, a relati1el) s0all ,an-anian@o(ne+ &o0pan), ha+
to 0a8e the ter0s o5 its agree0ent 5or onshore e9tra&tion open to the p/'li& in or+er to list
on the Dar es Salaa0 Sto&8 9&hange. ,he ter0s o5 its agree0ent 0at&he+ the 0o+el .SA
al0ost e9a&tl).
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Source:
http://www.economist.com/bo!s/b"ob"b/#$%&/$'/t"n("ni"s-troubes-o)er-!"s-
re)enue
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