Tanzania to Build New LNG Export Facility in Lindi

Source: Reuters 11/27/2013, Location: Africa

Tanzania is looking at building a massive facility to export liquefied natural gas (LNG) similar to those developed by the world's biggest gas exporter Qatar and may locate it in the southern Lindi region, a minister said.

East Africa has become one of the world's hottest new oil and gas areas after a string of discoveries, which producers hope to exploit to feed energy-hungry Asia. Many top companies such as BG Group, Exxon Mobil and Statoil are at work in Tanzania to tap its gas reserves.

"We are thinking of building one industrial area, like what you have in Qatar, where you have all these (LNG) plants, petrochemical industries," George Simbachawene, Tanzania's deputy minister for energy and minerals, said in an interview to Reuters on the sidelines of the Africa-Asia Oil and Gas Summit in Singapore. The government is looking at building the facility by 2020 and is zeroing in on Lindi, the second most southerly region in coastal Tanzania. Cost details of the project haven't yet been worked out, he said. The minister's comments come amid an ongoing review of proposals submitted by international oil companies to locate a gas plant in Lindi.

Tanzania is estimated to have more than 40 trillion cubic feet (TCF) of gas, which it said could rise five-fold over the next five years, putting it on par with some Middle East producers. It also plans to start gas exports to its energy-starved east African neighbours in 2015.

The country, which has in place 26 production-sharing agreements with several overseas companies, released a policy document in October called "Natural Gas Policy of Tanzania 2013", listing the government's objectives for the gas industry, including regulating mid- and downstream activities, gas processing and liquefaction to storage and distribution.

Tanzania also plans to boost its gas-based power capacity by 900 megawatts, taking the country's generation capability to 2,400 megawatts by 2015-16, the minister said. Our priorities are, "first, to generate electricity to meet the country's demand. Second the use of gas in institutions, household, motor vehicles, then for export of LNG", he said.

Oil-fired power plants currently account for 45 percent of Tanzania's power generation costs, followed by gas-fired power plants at 42 percent and hydropower stations at 13 percent, according to Tanzania's state-owned power utility, TANESCO. Tanzania's peak power demand stands at around 900 megawatts, while its installed capacity is 1,500 megawatts.

To make ample gas available across the country, the government is planning to build two new pipelines, totaling 1,400 kilometers long, connecting major areas, he said. Those pipelines are still under the planning stage, and the government will invite bids from companies to build them.

Based on the cost of $1.25 billion in building a pipeline from Mtwara, which has been the supply base for offshore exploration, to the commercial capital, Dar es Salaam, the two new pipelines will also each cost about the same, he said.

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