Tanzania LNG Before 2027 'Unlikely'
Tanzania is unlikely to begin LNG exports before 2027 because of delays in the construction of an onshore liquefaction and export facility in the south of the country, a London-based consultancy has said.
There has been little progress on the plan by a partnership of five international firms to build the $30bn planned terminal at Lindi at Tanzania's Indian Ocean coast. Statoil, whose partner is ExxonMobil, and Shell, which has Pavilion and Ophir as partners, have since 2014 been involved in the LNG export plans. Statoil indicated in 2016 that final investment decision will be delayed by at least five years.
Despite the country's 57 trillion ft3 of mostly offshore gas resources, investors have been unnerved by tough fiscal and local content laws introduced by Tanzanian President John Magufuli's government, as well as general interference in the operation of natural resource companies.
"Based on the new model production sharing agreement, companies may expect higher taxation, an expanded role for the state and more stringent local content mandates," said London-based consultancy Business Monitor International (BMI) in its latest report.
Two laws passed in June 2017 empower the government to force gas and mining companies to renegotiate contracts. On January 2, 2018 the parliament - controlled by Magufuli's party - launched an investigation into what it believes are low revenue inflows from gas. A report on their findings was expected in February. His government has also precipitated a delay in the finalisation of a proposed sale of shares in a local unit of Canadian gas producer Orca to Swala Oil and Gas, a Tanzania-listed company.
Despite low local consumption of gas and oil in the East African country, BMI expects the national population, currently estimated at 56mn, and economy to continue growing thus boost fuel use. "Oil consumption continues to outstrip gas, although development of the country's substantial gas resources could tip the balance, as we see continued efforts to invest in new gas-fired power generation," said BMI.
Exploration and production in East Africa should be low this year, the consultancy firm added, as companies reduce capital expenditure amid a drop in oil prices and continuing insecurity in South Sudan.
Whereas Tanzania's struggling on its path to gas exports, its southern neighbour Mozambique, with a more attractive investment climate and an estimated 180 trillion ft3 gas offshore, looks to begin initial LNG exports to Europe and Asia around 2022.
Kenya scouting for Mozambican gas
Kenya is looking to become a market for Mozambican gas. Kenya recently revived a plan to build a 700MW of gas-fired generation capacity near its key port city of Mombasa. Senior Kenyan and Mozambican officials met and agreed in the Mozambican capital Maputo on March 30 2018 for Kenya to import Mozambican gas to fuel the plant(s) at an estimated cost of $1.29bn per year. As there is no land border between the two countries, LNG is seen as the only way Kenya can import Mozambican gas. However the first Mozambican export project Coral FLNG will not start producing until late 2022 - and all its output has been sold to, and will be marketed by, BP.