africa

Yale Center for the Study of Globalization
could equally be Mozambique).
Figure 24.2: Break-Even Delivery Prices for Natural Gas to Asia (US$ per MMBTU)
Source: Ledesma (2013).
The first conclusion from these comparisons is that while liquefaction costs are quite
standard, and the greenfield site must carry the cost of new investment in infrastructure,
Indian Ocean supply is competitive in terms of production cost compared
to Australia and in terms of transport margins compared to the US. The second
conclusion is more striking: for all sources of supply, the margins are modest at
current price forecasts, which range between US$11 and US$15 per MMBTU in
current prices. 9
Translating these cost comparisons into government revenue requires us to think
about both the pure rent from the development of the resource and the contractual
basis on which this rent is shared between the operating companies and the government
and people of Tanzania.
The gas contract: 10 Gas contracts—the fiscal regime—in Tanzania are laid out
in the Petroleum Act and it is reasonable to assume that some variant of these
forms will apply to future contracts for the deep-water natural gas finds. Thus the
contracts will likely be a hybrid between a production-sharing and an income tax/
royalty regime. 11 Revenues under such contracts accrue through three channels.
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