A DRAFT agreement between the government of Tanzania and international oil companies seeking to build a 30 billion US dollar liquefied natural gas (LNG) export project is now ready, a senior official has said.
As global race for LNG intensifies,
Tanzania, holder of East Africa’s biggest natural-gas reserves after
Mozambique has completed its first draft of host government agreement, a
first step, in setting out terms on which foreign investors will build
and run the project.
Ministry of Energy and Minerals Acting
Permanent Secretary, Prof James Mdole said here that the document has
been submitted to the minister, Prof Sospeter Muhongo, for review and
additional input.
“This is a draft document” that will
establish a hosting government agreement, a key component towards
constructing a 10 million tonnes per year LNG plant.
Tanzania, with natural gas reserves of
57.25 trillion cubic feet, is racing with Mozambique to build an export
plant. The state-owned firm Tanzania Petroleum Development Corporation
(TPDC) is partnering with Statoil, ExxonMobil, Ophir and Shell on the
development of the project that will enable Tanzania to export its
offshore gas reserves.
Energy Minister Prof Muhongo said the
government will involve private experts in the oil and gas industry,
before meeting international oil companies planning to invest in the
construction of the plant. “We must beat Mozambique to secure markets in
Japan and South Korea,” Prof Muhongo said at a workers meeting held
through teleconference in Dodoma, Mwanza and Dar es Salaam, last week.
According to the Minister, the export
terminal planned for Lindi region will be worthless should Mozambique’s
LNG come first as export contracts take between 15 to 20 years. “Buyers
would need to sign long-term contracts and this has a direct effect to
the nation in case our competitor also targets the Asian market,” he
said.
The neighbour, Mozambique, is hoping to
develop large-scale natural gas production in order to export LNG, but
it too has hit brick walls. It is heading towards a major default on
outstanding loans related to offshore natural gas infrastructure,
symbolising the deflating hopes for a major source of new natural gas
production.
Prof Muhongo said the government is
committed towards transforming its energy sector and improve livelihood
of its people. He said plans were ongoing to increase supply of natural
gas for domestic purposes, insisting other than being cheap it was
environment friendly.
“We’re facing serious climate change due
to massive deforestation. A large community still uses charcoal as
primary energy source.” In Dar es Salaam, the country’s commercial
capital, a sack of charcoal is now traded at between 50 000/- and
60,000/-.
A modern family in the city connected to natural gas supply spends less than 30,000/- a month as cost for service.
The national 2017/18 budget estimates
presented by Finance and Planning Minister, Dr Phillip Mpango, indicated
that the government will allocate sufficient funds to compensate
villagers who will pave the way for the construction of a plant at
Likong’o Village in Lindi.
The government acquired over 2,000
hectares of land for the planned LNG terminal near the large offshore
natural gas discoveries.
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