LNG to grow in Sub-Saharan Africa

Posted on :Friday , 26th June 2015

Tanzania is estimated to hold significant reserves of gas offshore, equating to approximately 55 trillion ft3 of recoverable resources. BG Group and Statoil are currently developing the country’s only proposed LNG liquefaction facility, which will be fed by gas sourced from Blocks 1 and 2. The facility, which has an expected CAPEX of approximately US$30 billion, will comprise of at least two trains, each with a capacity of 5 million tpy. The FID is now expected in 2016 with the project due to come onstream later than the Mozambique projects, in 2022. The project developers are awaiting a final decision from the Tanzanian government regarding site selection, which is expected to be located in either Lindi or Mtwara.

In October 2014, the Tanzanian government approved a long awaited policy to regulate the natural gas industry. This policy, which corresponds to the Production Sharing Agreement (PSA) that was updated in 2013, states that the domestic market must receive priority with regards to gas supply.

At the same time, the government approved its midstream-focused natural gas policy. An additional policy outlining the exploration and production of the gas sector is currently under development. The progression of this proposed policy has stalled as it will now not be discussed in Parliament, as was previously expected. Due to the upcoming general elections during 2015 it is not known when the bill will be taken to Parliament. Local content requirements are currently outlined in the 2013 PSA that states that companies must comply with the first draft of the government’s local content policy released in April 2014.

This delay leaves Tanzania at a disadvantage compared to Mozambique and may potentially disturb any foreign investment. Companies, including BG Group, have stated that they will not rush into making any investments decisions due to the planned general elections – the outcome of which may have an effect on the new petroleum policies.

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