Tanzania LNG project set for step forward -sources

Reuters

By Fumbuka Ng'wanakilala

DAR ES SALAAM, Nov 22 (Reuters) - Tanzania's hopes ofbecoming a major gas exporter are set for a boost on Monday whenoil company and government officials meet to review a proposedsite for a gas liquefaction plant, according to two energysources.

According to one source in Tanzania, BG Group, OphirEnergy, Statoil and Exxon Mobil havesubmitted proposals to locate a gas plant in the southern regionof Lindi. A second source confirmed that a meeting in Dar esSalaam would review the proposal. Both have close knowledge ofthe project.

Tanzania and its east African coastal neighbour Mozambiquehave joined Russia, Australia and Canada in the race to exploita gap in global supply for liquefied natural gas (LNG) that isexpected to open up by 2020.

Australia is already set to be a big exporter by then. Butsince the arrival of the United States in the race with itssupplies of shale gas, project planners elsewhere have begun tohesitate.

No new LNG project has won a final investment decision(FID)anywhere in the world outside the United States for almosttwo years, making the choice of the site and Monday's meeting animportant 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 bythe end of the year.

"BG Group and other oil majors have submitted a proposal tothe ministry of energy and minerals for the construction of ajoint LNG terminal in Lindi region, which is expected to costaround $15 billion," the Tanzanian energy source told Reuters.

Lindi is the second most southerly region in coastalTanzania after Mtwara, which borders Mozambique. Its maincoastal town, also called Lindi, has a population of 860,000 andlies about some 450 km (280 miles) south of the commercialcapital, Dar es Salaam.

CONTROVERSIAL CHOICE

The choice of Lindi for the plant could cause somecontroversy in Mtwara, which has been the supply base foroffshore exploration.

Earlier this year violent protests took place as Mtwaranresidents opposed the construction of another project - apipeline that will carry gas north to the capital. The residentswant a bigger share of the benefits from the industry.

A spokesman for BG, operator of three offshore blocks withits partner Ophir, declined to comment on the proposed locationor to offer other details, although the company said last monthit had offered site proposals for the government'sconsideration.

A senior Tanzanian energy ministry official had no immediatecomment on the issue.

Statoil, which operates a single neighbouring block withpartner Exxon, said earlier this year it was moving ahead with asite proposal. On Nov. 1, it moved high-profile executiveOeystein Michelsen from his job as head of development andproduction in Norway into the role of Tanzania country manager.

BG Group has said the proposed plant would have several LNGprocessing units, known as trains, with total capacity of 10million tonnes a year and 2020 expected to be the earliest datefor 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 ofgas. Statoil has said its field may contain a similar amount orpossibly more.

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