The government of Tanzania is bracing itself to receive millions of dollars in capital gains tax following Shell’s acquisition of BG Group assets in Tanzania gas wells.
The deal officially announced on February 22, 2016 amounts to $55 billion.
BG Group Tanzania, with its partner Ophir Energy, has invested over $1 billion in a fast-track exploration appraisal programme. BG owned 16 wells for blocks 1, 2 and 3, which contain an estimated one-third of Tanzania’s gas reserves.
According to the East African newspaper, this deal that positions Tanzania as one of the leading gas top suppliers in Africa is the biggest in more than a decade.
Tanzania is expected to endorse the transaction and change of shareholding once the capital gains tax payment has been effected.
The takeover now gives Shell a 16 per cent controlling stake in the world’s liquefied natural gas (LNG) business, with Tanzania and Egypt as its anchor operation areas on the African continent. Tanzania has proven reserves of 55 trillion cubic feet of natural gas, which is expected to generate almost $5 billion annually.
The country is expected to construct an LNG plant at the start of next year, with a target completion date of 2024, depending on Shell’s strategies.