Tanzania, India, And Natural Gas – A Bit Of Forgotten History

Once in a rare while, a few dots connect along an older arc of time to revive forgotten links.

Dot one: Foreign Minister Dr S Jaishankar was in Tanzania this week, to consolidate bilateral relations between the two countries, and review development projects being carried out by India there.

The high-points were his visit to a technology centre in the capital, Dar Es Salaam, which runs an India-built PARAM supercomputer, and an announcement that the Indian Institute of Technology would open its first foreign campus at the historically famous entrepot island of Zanzibar.

Dot two: three energy giants – Equinor, Shell, and Exxon – signed an agreement with the Tanzanian government, in May, to establish a Liquified Natural Gas (LNG) export terminal on the country’s coast. 

This is a significant decision, because it will unlock large volumes of gas discovered over the past few decades in deep-water sedimentary basins offshore Tanzania. It will also provide cheap energy in large volumes to a country where only a third of the population have access to electricity.

Vipul Shah, a businessman based in Dar Es Salaam says he is as excited about the opportunities this project presents, as its capacity to transform Tanzania and propel its people out of poverty.

Swarajya’s Naren Menon was the first to point out that this LNG project would make commercial sense only if much of the gas was sold to India. This is true for a number of reasons.

First, the global LNG sector is actually suffering from a glut, with large exporters like Australia and America managing to maintain market share only by constraining other major exporters like Qatar (see here for a detailed review of the sector’s complicated dynamics).

Second, this glut is only set to grow, with Iran, which has the second largest reserves of natural gas in the world after Russia, announcing that they will be setting up a large LNG export terminal in a few short years.

Third, that makes LNG a buyer’s market, and the advent of countries like Tanzania will only add to the suppliers’ pain. That’s good for India, because the more options we have, the better a deal we can cut. Besides, we are Tanzania’s closest and largest market.

This decision to set up an LNG export terminal in Tanzania marks a new phase in a story which began 50 years ago, in India; a story which has been largely written out of history for reasons unknown.

In 1973, India and China were in fierce competition to execute foreign aid projects in East Africa. The Chinese got the Tanzania-Zambia railway line project, and India got a project to explore for oil and gas in Tanzania.

A senior geologist from our Oil and Natural Gas Commission (as it was then known) and an IAS officer, were hurriedly deputed to drive the project in coordination with the Tanzania Petroleum Development Corporation (TPDC).

It was rank wildcatting, because no hydrocarbons had yet been discovered anywhere in East Africa, and explorers had only a vague idea of sedimentary basins in the region. 

But ONGC was the toast of the season, and their ‘street cred’ was on a high after their discovery in 1973 of Bombay High, the super-giant oilfield offshore our Western coast.

Some offshore seismic surveys had been carried out just off the Tanzanian coast, around the island of Songo Songo, by AGIP, the Italian oil major. They mapped a geological structure under the island, and drilled a well which unfortunately hit water.

But for ONGC, oil exploration in Tanzania would have ended then and there. Their interpretation of the seismic data showed that the Italians had drilled at the wrong location, below a gas-water contact. 

That cemented ONGC’s stature in the Tanzanian government, and they were invited to manage further exploration activities. 

India responded enthusiastically, sending its best oilmen to Songo Songo (most of whom had cut their teeth on ONGC’s flagship project at Nawagam oil field, south of Ahmedabad).

In 1976, ONGC drilled the second well at Songo Songo. They hit gas. Unfortunately, the formation pressures were greater than expected, and there was a blowout. No one was seriously injured, the blowout was capped, everyone breathed a heave of relief, and Tanzanians were able to celebrate their first hydrocarbon discovery.

More drilling followed over the next few years, as ONGC sought to delineate the field and determine gas reserves. 

This is when the Norwegians entered the picture. They too were now experts in the industry, after a string of offshore discoveries in the North Sea, and they also brought funding.

So, for a while, you had Tanzanians, Indians, and Norwegians, working together on a project in the Indian ocean. It was a period when Indians got to show their professional expertise in various fields to a global audience.

There was EF Osta, the last word in wireline operations; K Damodaran, the legendary production engineer; JM Joshi who did the initial evaluation of Songo Songo, and later went on to head ONGC’s Institute of Reservoir Studies; RC Shah, who did the reserves estimation (his report impressed the Norwegians to no end!); Dr. Hemant Aterkar, the camp medic, and the first doctor the residents of the island had ever seen; and making sure everything went as per plan was a dashing young First Secretary at the Indian High Commission named Kanwal Sibal.

The diplomatic angle, of improving bilateral links between Tanzania and India, was pursued actively. 

Vice President BD Jatti visited Tanzania in 1975. He was received with great fanfare by the Indian diaspora, the Tanzanian government, and the ONGC team. Prime Minister Indira Gandhi too made a visit to the country the next year.

ONGC’s camp doctor proved to be such a draw that the Indian High Commission used him to conduct an inoculation programme, at India’s cost, for the islanders. This is how the relationship between the two countries has been built.

By the end of the 1970s, ONGC’s work was over, and their discovery at Songo Songo went into limbo, as getting the gas onshore was a technical and financial challenge. 

That hurdle was overcome only this century, when a pipeline was finally laid. Today, around half the electricity in the country is generated at the Ubongo power plant in Dar Es Salaam, using gas from Songo Songo.

ONGC’s parting gift to Tanzania was a considered geological opinion, that a lot more gas lay waiting to be discovered in the deeper waters. That prediction came true only many decades later, when deep water technology matured, as a result of which, Tanzania now has more reserves of natural gas than India or Norway!

For this proposed LNG terminal to be viable, the three energy majors and Tanzania will need to enter into long-term contracts, at competitive prices, with a major importer. The LNG terminals at Hazira, Dahej, and Vypeen say ‘Jambo!’ (‘Hello’ in Swahili).

If someday, an LNG tanker hauls a load of Tanzanian gas to India across the Indian Ocean, it will mark the fruition of a half-century old journey in building bilateral links. And for those Indians who were instrumental in successfully establishing the presence of hydrocarbons in Tanzania, the moment will be particularly poignant.