Tanzania set for talks on LNG development

01 August 2012, Sweetcrude, DAR ES SALAAM – THE Tanzanian national oil firm and Norway’s Statoil will soon hold formal talks on their plan to build a liquefied natural gas, LNG, plant in the East African country to take advantage of the country’s recently discovered gas resources.

The Norwegian state oil company is looking to commercialise the Lavani and Zafarani discoveries, with combined resources of around 9 trillion cubic feet, made in its operated Block 2 together with partner ExxonMobil.

Statoil has confirmed that it is currently in dialogue with Tanzania Petroleum Development Corporation (TPDC) and the authorities about a possible development of the LNG facility.
Formal talks on the plan will hold later this month, Bloomberg reported.

“We are currently in an early phase of evaluating the concept selection for a possible LNG plant,” Statoil spokesman Fredrik Norman said.

A Statoil delegation is due to arrive in Tanzania this month for “inception talks”, according to TPDC’s principal petroleum geologist Kelvin Komba.

BG Group, which has separately discovered about 7 Tcf of recoverable resources off Tanzania, has been engaged in a parallel process for the past two years, including identifying potential sites for an LNG plant, company spokesman Kim Blomley said.

Komba said that Tanzania is currently drafting a gas policy and legislation to guide development of the nascent industry following the breakthrough offshore finds.

The government may however require operators to satisfy local demand for gas before export and jointly develop a single LNG plant, instead of building at several sites, to cut costs, he said.

“This will be cost-effective, and it works for us, because it is government that will pay for the plants through foregone revenue in companies recovering costs,” Komba said.

This could mean Statoil, which has previously been looking at a possible floating LNG solution as part of a standalone development, working together with BG Group to develop one facility.

A Statoil spokesman recently told Upstream “it is only natural to have a dialogue with other operators in the region”, adding that plans by Tanzania’s government to have an LNG project up and running within seven years were “not totally unrealistic”.

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