Tanzania to decide on $15-billion project for LNG exports in three years

By RAKTEEM KATAKEY
Bloomberg

Tanzania, holder of East Africa’s biggest natural-gas reserves after Mozambique, will decide on a $15 billion export plant in three years, potentially adding to a glut of supply projects from the US to Australia.

Construction of the 10 MMtpy liquefied natural gas (LNG) plant would probably be complete around 2020, said Willington Hudson, a director at state-run Tanzania Petroleum. BG Group and Statoil are still drilling the fields that would feed the plant, he said.

Discoveries in East Africa this decade have established the region as the newest gas province and raised the prospect of exports to world markets. While rival projects from North America to Australia promise to boost global shipments, BG and its peers in Tanzania and Mozambique are pressing ahead on the expectation demand will outstrip supply in the coming decades.

“You need to look at energy demand for the next 50 years,” said Hudson, director for downstream operations, in an interview in London. “Demand for gas will continue going up.”

Tanzania’s first offshore gas discovery was made in 2010. Since then a series of finds has expanded the country’s potential reserves to 55 trillion cubic feet, enough to meet about 11 years of demand from US homes. Almost 90% of the resources are far out at sea, making extraction difficult, Hudson said.

Mozambique Plans

In Mozambique, Anadarko Petroleum and its partners are planning a 10 MMtpy LNG export project with a target start date of 2018.

The East African plants will compete with projects in the US, where a boom in shale-gas production has driven down prices, and Australia, where the Queensland Curtis LNG complex plans to ramp up exports this year. Papua New Guinea has also started shipments abroad while projects are moving forward in Canada.

Some LNG projects around the world will face delays or even cancellation, according to the International Energy Agency. Plants in Mozambique and Tanzania are unlikely to come on line by 2020 because of the “challenges” they face in a low oil and gas price environment, said Costanza Jacazio, senior gas analyst at the IEA.

In Tanzania, the government has chosen the location of the proposed LNG plant, Hudson said, without giving more details pending an official announcement.

Regardless of export plans, Tanzania needs its gas to build gas-fired power stations and petrochemical plants, according to the director. Any surplus fuel can be sent to neighbors including Rwanda, Burundi and the Democratic Republic of Congo.

“If we have any extra gas, it will make more sense to use it locally and use it within the region,” Hudson said.“ We need the energy to power our own economy.”

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