Dr. James Mataragio – Managing Director, Tanzania Petroleum Development Corporation
18.03.2016 / Energyboardroom
The TPDC’s Managing Director discusses his motivations for joining the organization, the restructuring of the Tanzanian O&G market, long-term plans including investment into LNG, and exploring Tanzania and East Africa’s enormous potential.
Could you please introduce yourself to our readers mentioning why, after working in the USA and the private sector for an extensive period of time, in December 2014, you suddenly decided to return to Tanzania and take up the challenge of managing a state owned entity like the TPDC?
My background is as a geoscientist, and I have been one for over 15 years now. I started my career back here in Tanzania. After majoring in geology from the University of Dar es Salaam, I went straight into the mining sector, which was Tanzania’s keynote traditional industry in at that time. A year later, I relocated to Japan to study for my Master’s degree and subsequent to graduation, returned to Tanzania to work for Anglo American plc., a multinational mining corporation.
Shortly afterwards, I was invited to teach at the university here, a role which I fulfilled for less than a year before moving to the US to complete a PhD at the University of Missouri. After receipt of my doctorate, I was offered a job at Bell Geospace, where I spent a decade working on extractive industry projects – initially mining sector focused, then later on oil and gas sector related – across a wide range of countries including Canada,
Brazil, Uganda and Kenya.
I’ve always maintained strong ties to my homeland, returning every year and cultivating strong ties both with the ministry and academia. When this position of managing the national oil company was first advertised, it was actually my friends and colleagues who encouraged me to apply for the position.
At first I was hesitant to accept bearing in mind that this would be a very political position and that the hydrocarbons industry is relatively new in Tanzania. At the same time, I was eager to return home and participate actively in the development of my country. In end, I applied and barely six months later found myself being appointed to the role by the president.
How will recently approved new oil and gas legislation impact the structure, mandate and responsibilities of the TPDC? What sort of transformative changes will these developments necessitate within the national oil champion?
.
The TPDC is undergoing a transformation from being a 100 percent government-owned entity to a commercial corporation. Our vision is to follow in the footsteps of other national oil companies round the world and to go global. We currently have a full time staff of 400 employees, which is quite a lot given the size of our existing project portfolio. It’s important to remember that alongside our in-house service expertise, we were, until very recently, also doubling up as the national oil and gas regulator.
The recent legislation entails a full restructuring of the sector in which Tanzania’s oil and gas regulatory functions will be spun off from the NOC to an entirely new organizational entity called the Petroleum Upstream Regulatory Authority (PURA). This will be of great benefit to the TPDC as it will enable us to concentrate on our core tasks of exploration and production (E&P) without other distractions. My own appointment is indeed a product of this far-reaching, industry-wide restructuring.
Under the new rules of the game, what will the frame of the Production Sharing Agreements (PSAs) look like? Will the TPDC feature as a mandatory partner on all upstream oil and gas projects?
The rationale behind the reforms is to foster expansion of the industry. Under the new regulations the TPDC, as a freshly structured national oil company will participate with a stake of at least 25 percent in each and every domestic field. We will also act as the owner of the licenses. Therefore, anyone that wants to operate in Tanzania will automatically need to partner with the TPDC.
We were keen to combat an issue that we noticed cropped up previously with the mining sector in which private sector investors hung on to licenses so as to trade them, but with little intention of actually producing. Tanzania’s oil and gas resources are national endowments the proceeds of which the entire nation has the right to benefit. The TPDC, as the custodian of all upstream activity in the country, will ensure that the full benefits of this resource base flow back to people. To this aim, we are in the process of setting up a national petroleum fund composed of the revenues derived from the development of the sector. A proportion of that will then be reinvested back into oil and gas activity thus securing the sustainable future of the local industry.
What is the overall development strategy for exploiting Tanzania’s full oil and gas potential?
When it comes to gas, we possess a huge domestic and regional market. We are now producing gas onshore, and we have recently completed a pipeline from our onshore gas fields in Mnazi Bay (Mtwara) and Songo Songo (Lindi) to Dar es Salaam. In October 2015, we started pushing first gas through the pipeline to a gas power plant in Dar es Salaam, which represents a massive milestone for the country. This 542 km pipeline and the two gas processing plants together constitute a mega project for a country like Tanzania and are financed to the tune of some USD 1.2 billion.
Electricity prices in Tanzania are comparatively low. How will you handle the inevitable tensions that are created between gas partners that would like to see their gas equity being exported and the needs of Tanzanians in consuming affordable electricity?
We are currently working out the policy framework for this area, but for this year, the gas we are producing in the country will be exclusively for local consumption. There is huge potential for Tanzania’s gas industry to blossom: offshore alone, our discoveries are estimated to be as large as 45 Tcf of gas, and this volume is set to be developed within the next eight to ten years. We are also in the pre-FEED stage of building a two-train LNG export terminal in the southern town of Lindi that will ultimately help us export gas. Although we do need to negotiate contracts with our partners regarding this facility, we also have to be appreciative of the fact that the gas price could be in a very different place five years from now.
Bearing in mind the possibility of volatility in gas pricing, just how risky is this LNG project?
I believe that over the long-term, the oil and gas business is always cyclical. I am optimistic that, within the next two or three years oil prices will rebound. TPDC’s focus is a long-term focus. We consider that future prices will be good enough for us to not delay in proceeding with the development of our LNG project. Today, as partners on the project, we have
Statoil, BG Group,
ExxonMobil , Ophir Energy (Pavillion), and if
Shell come, that will be even better! These are all very solid financial partners. TPDC will enter the project with the land for the terminal as its equity, and later down the line, we will invest using local financing, but the detail of this is still under discussion.
Is there oil to be developed for the TPDC in Tanzania?
Absolutely. We believe that the very same structures that have led to impressive oil discoveries in Uganda and Kenya also extend right down to the northern part of Tanzania. This is thus our current focus for oil exploration. To date, we have mobilized two airborne systems in this area, to define some structures that could have the potential for oil. From here, we can start planning seismic surveys, along with international seismic experts, which will allow us to add value to the exploration blocks that we plan to offer to partners. My perspective is to add value to the ground – even at a minor scale.
How do you intend to scale up the activities of TPDC? And what skills and capabilities do you feel TPDC still needs to acquire?
Although we are taking steps to improve the ecosystem in Tanzania for oil and gas, our priority now is to focus on exploration, and build ourselves up as a commercial company. TPDC has been around for 40 years, but until I came on board, there was something of a freeze in the company.
Now we have started taking on a lot of employees directly from university, and are eager to start building longer-term capacity in the system. The IOCs currently working in Tanzania are helping with this, through local content regulations and also by helping to build up our university capacity through the sponsorship of Master’s students programs and funding some research projects.
Slowly, we are building up Tanzania’s domestic oil and gas capacity. These are challenging times for building skills because our partners maybe at times, due to constraints in their budgets, are less willing to support the talent building pool.
What is your outlook for the future of oil and gas in Tanzania?
In oil and gas, East Africa is now a very well established player. We have oil in Kenya and Uganda and plenty of gas in Tanzania and Mozambique. I hope that international companies will realize the real potential of Tanzania for both oil and gas. We have, to date, barely explored half of the country, yet from what we have witnessed so far, the potential is absolutely enormous.
Source :
Interview: Dr. James Mataragio, Tanzania Petroleum Development Corporation