Tanzania is endowed with diverse energy sources including biomass, natural
gas, hydropower, coal, geothermal, solar and wind power, much of which is
untapped. Wood-fuel accounts for up to 92% of total energy supply with about 2%
from hydro-electricity and 7% from oil-derived products.
Nonetheless the downstream oil industry is an important sector of the
country's economy absorbing on average 55% of the country's foreign exchange
earnings. Government policies are directed at petroleum product substitution by
exploiting indigenous resources.
In the upstream oil industry, oil and gas exploration and production is also
being encouraged. Extensive gas fields have been identified off the coast at
Songo Songo and Mnazi Bay and these are in the process of being developed.
The hydrocarbon industry is regulated by the Ministry for Energy and
Minerals, with upstream activities governed by the Petroleum (Exploration and
Production) Act 1980 and the downstream activities by the National Investment
(Promotion and Protection) Act 1990.
Tanzania, with its oil seeps, seismic and other data, shows strong
hydrocarbon potential in its upstream oil industry sector. However, only 20
wildcat exploration and 8 development wells have been drilled in a 222,000 sq
km area, and therefore Tanzania can be classified as underexplored.
Current natural gas reserves are estimated to be 2 trillion cubic feet
(tcf). The government is working closely with the World Bank to develop the
Songo Songo gas fields off the Southern Tanzanian coast and in the Mnazi Bay
area, with a view to substituting expensive imported petroleum fuels. The Songo
Songo gas-to-electricity project will have a ready market of 17 potential
industrial users of natural gas in the Dar es Salaam area.
Companies currently conductiong oil exploration in Tanzania include: PanOcean Energy, Aminex plc and EnerGulf.
