Tan­za­nia fi­nalises land deal for de­layed LNG pro­ject

The Pak Banker - - 6BUSINESS -

Tan­za­nia said on Fri­day it had fi­nalised a land ac­qui­si­tion for the site of a planned liq­ue­fied nat­u­ral gas (LNG) plant and was now work­ing to com­pen­sate and re­set­tle vil­lagers to move for­ward on a long-de­layed pro­ject.

Tan­za­nia's nat­u­ral gas re­serves are es­ti­mated at more than 55 tril­lion cu­bic feet (tcf) and the cen­tral bank be­lieves 2 per­cent­age points would be added to an­nual eco­nomic growth of 7 per­cent sim­ply by start­ing work on the huge plant that would draw in bil­lions of dol­lars of in­vest­ment.

BG Group, be­ing ac­quired by Royal Dutch Shell , along with Sta­toil, Exxon Mo­bil and Ophir En­ergy plan to build the on­shore LNG ex­port ter­mi­nal in part­ner­ship with the state-run Tan­za­nia Pe­tro­leum De­vel­op­ment Cor­po­ra­tion (TPDC). They aim to start it up in the early 2020s.

But their fi­nal in­vest­ment de­ci­sion has in part been held up by de­lays in fi­nal­is­ing is­sues re­lated to the site.

"Af­ter se­cur­ing the ti­tle deed, the law re­quires the owner to pay com­pen­sa­tion to the rel­e­vant par­ties based on a val­u­a­tion done by the chief govern­ment val­uer," TPDC said in a state­ment.

TPDC now owns ti­tle deed for some 2,071.705 hectares of land that have been set aside for the con­struc­tion of the planned two-train LNG ter­mi­nal at Likong'o vil­lage in the south­ern Tan­za­nian town of Lindi, which is lo­cated close to large off­shore gas finds. An­other 17,000 hectares of land around the site for the pro­posed LNG ter­mi­nal has been al­lo­cated for an in­dus­trial park.

The land was bought from large landown­ers and some in­di­vid­ual vil­lagers. Tan­za­nia's new pres­i­dent, John Magu­fuli, has promised more ur­gency in de­ci­sion-mak­ing, re­spond­ing to a fre­quent com­plaint from busi­nesses. One ex­am­ple has been de­lays in fi­nal­is­ing a site for the multi-bil­lion dol­lar LNG plant that will ex­ploit huge off­shore gas finds.

Oil com­pa­nies were un­able to gain ac­cess to the site un­til the land pur­chase, an­a­lysts say.

"The next key thing to watch

is how quickly a host govern­ment agree­ment is ex­e­cuted be­tween the Tan­za­nian govern­ment, TPDC and IOCs (in­ter­na­tional oil com­pa­nies)," Ahmed Salim, se­nior as­so­ciate at con­sul­tancy Te­neo In­tel­li­gence, said in a note to clients.

East Africa is a new hotspot in hy­dro­car­bon ex­plo­ration af­ter sub­stan­tial de­posits of crude oil were found in Uganda and ma­jor gas re­serves dis­cov­ered in Tan­za­nia and Mozam­bique.

Mozam­bique's plans to build an LNG plant have moved more swiftly. With other LNG projects mov­ing ahead around the world, the best deals for long term gas sales con­tracts will likely be se­cured by those who come on stream first, an­a­lysts say.

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