Over the last decade, LNG prices in the three main markets of North America, Western Europe and East Asia have diverged significantly at times. This briefing presents two case studies of developing countries that have faced challenges in securing public revenue from their natural gas industries.
The Tanzanian government and a consortium of companies are negotiating the regulatory terms for a game-changing LNG project. In this brief, the authors update a previous analysis of some of the key decisions that will be made in the negotiation and their potential impact on whether the project proceeds and the levels of revenues that it could generate for the government.
There is a reasonable chance that foreign investment in the LNG project will not happen under current conditions. If the project does proceed, the government revenues it generates are unlikely to be transformative.
Fiscal rules—permanent quantitative constraints on government finances—are an important tool to help mitigate the macroeconomic challenges associated with managing natural resource revenues. This paper sheds light on large gaps in compliance and oversight of fiscal rules, and provides policy recommendations on how fiscal rules can be further strengthened.