Industry Trend Analysis - Regulatory Uncertainty Continues To Impede - APR 2017
BMI View: Despite positive onshore activities, ongoing uncertainty stemming from the country's fiscal and regulatory regime will continue to dampen investor sentiment towards the country's hydrocarbon sector.
Ongoing regulatory uncertainty in Tanzania will act as a key barrier to foreign direct investment (FDI) in the gas sector unless compromises can be reached with foreign companies. We maintain that fiscal and regulatory uncertainty was central to the delay in the proposed onshore LNG terminal in the country, which would have been a catalyst for growth within the hydrocarbon sector. (see 'Prices, Regulations Delay LNG Dreams ' , December 15 2016). Furthermore, the recent rejection of local content requirement legislation by oil companies, following a stakeholder meeting in early February, highlights the ongoing barrier to investment in the upstream space.
The current draft of petroleum legislation continues to be non-conducive to widespread investment in the offshore gas sector. Notably, the extent to which foreign oil companies are required to comply with local content requirements remains a highly contentious issue. Ophir Energy, along with Shell through their participation in the Oil and Gas Association of Tanzania (OGAT) has rejected draft regulation regarding the extent of required local labour, resources and services used in petroleum operations.
|Tanzania Underperforming Potential|
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