The politics of gas contract negotiations in Tanzania: a review

Tanzania started developing its gas resources commercially only a decade ago. Major gas finds have accelerated the development of its petroleum sector and affected the country’s whole political economy. This paper provides a review of these processes, focusing on factors influencing the negotiation of contracts. It argues that the Tanzanian government’s bargaining strength has improved over the last decade though lower oil prices have put this under some pressure recently. By focusing on the broader framework of contracts – including infrastructure, power production, and industrial use – that are important in developing countries, the paper furthermore argues that the focus on governance failure that has dominated the international policy discourse over the last decade risks skewing our understanding of these inherently political processes. The evidence from Tanzania suggests that negotiation processes involve other important issues, which will affect the price a government can get.