TANZANIA’S hopes of becoming a major gas exporter
are set for a boost on Monday when oil company and government officials meet to
review a proposed site for a gas liquefaction plant, according to two energy
sources.
According to one source in Tanzania, BG Group
(BG.L), Ophir Energy (OPHR.L), Statoil (STL.OL) and Exxon Mobil (XOM.N) have
submitted proposals to locate a gas plant in the southern region of Lindi. A
second source confirmed that a meeting in Dar es Salaam would review the
proposal. Both have close knowledge of the project.
Tanzania and its east African coastal neighbour
Mozambique have joined Russia, Australia and Canada in the race to exploit a
gap in global supply for liquefied natural gas (LNG) that is expected to open
up by 2020.
Australia is already set to be a big exporter by
then. But since the arrival of the United States in the race with its supplies
of shale gas, project planners elsewhere have begun to hesitate.
No new LNG project has won a final investment
decision (FID)anywhere in the world outside the United States for almost two
years, making the choice of the site and Monday's meeting an important set of
signals of confidence in Tanzania's project, even though the FID for it is not
due until 2016.
The government is expected to make a decision on the
site by the end of the year.
"BG Group and other oil majors have submitted a
proposal to the ministry of energy and minerals for the construction of a joint
LNG terminal in Lindi region, which is expected to cost around $15 billion
(£9.25 billion)," the Tanzanian energy source told Reuters.
Lindi is the second most southerly region in coastal
Tanzania after Mtwara, which borders Mozambique. Its main coastal town, also
called Lindi, has a population of 860,000 and lies about some 450 km (280
miles) south of the commercial capital, Dar es Salaam.
CONTROVERSIAL CHOICE
The choice of Lindi for the plant could cause some
controversy in Mtwara, which has been the supply base for offshore exploration.
Earlier this year violent protests took place as
Mtwaran residents opposed the construction of another project - a pipeline that
will carry gas north to the capital. The residents want a bigger share of the
benefits from the industry.
A spokesman for BG, operator of three offshore
blocks with its partner Ophir, declined to comment on the proposed location or
to offer other details, although the company said last month it had offered
site proposals for the government's consideration.
A senior Tanzanian energy ministry official had no
immediate comment on the issue.
Statoil, which operates a single neighbouring block
with partner Exxon, said earlier this year it was moving ahead with a site
proposal. On November 1, it moved high-profile executive Oeystein Michelsen
from his job as head of development and production in Norway into the role of
Tanzania country manager.
BG Group has said the proposed plant would have
several LNG processing units, known as trains, with total capacity of 10
million tonnes a year and 2020 expected to be the earliest date for starting
production.
BG Group has said it has gross resources in its
interests - covering Blocks 1, 3 and 4 - of about 13 trillion cubic feet of
gas. Statoil has said its field may contain a similar amount or possibly more.
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