By Sa’ad Bashir, in Dar es Salaam
The Tanzanian government is officially ready to host the construction of Liquefied Natural Gas (LNG) Plants(Trains) at the port town of Lindi in the country’s southeast.
The government has paid $6Million (12 billion shillings) for assessment and compensation of 450 people in the backwater coastal town, located on Lindi Bay, 450km south of Dar es Salaam.
The Tanzania Petroleum Development Corporation(TPDC) has acquired the title deed for about 2,000Hectares of land for the LNG Trains as well as gas processing projects in the town. The government has also set aside another 17,000 Hectares in surrounding areas for development of industrial parks that will purchase the gas from the facility.
BG (or Shell, which is acquiring BG) and Statoil will be expected to begin construction of their proposed LNG facility any moment from 2018. Neither of the two operators, who collectively have reported over 30Trillion cubic feet of gas in the last five years, is in a hurry to take Final Investment Decision within the next year.
Gas prices are struggling amidst a global gas glut and weak oil prices, to which they are indexed. In the first major gas supply transaction of 2016, Qatar’s Ras Gas Co Ltd, an LNG behemoth, agreed to almost half the original price, to supply LNG to Petronet LNG Ltd, India’s biggest gas importer. The renegotiated deal will save Petronet about $605Million per year.
In any case, deep-offshore Tanzanian gas development has essentially lagged behind the programme in neighbouring Mozambique, the other half of the pair of southeast African nations with massive deepwater gas tanks. But Tanzanian authorities have always said that government must play a role in infrastructure development for the gas monetization facility.
The Tanzanian Natural Gas Policy is skewed towards the domestic use of the country’s natural gas as a primary focus. Export comes next to this in-country beneficiation, notwithstanding the small size of the local market. “Once the project is complete it will enable the production of natural gas for internal use as well as for export generating much needed foreign exchange,” TPDC said in a statement.