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Tanzania LNG plant site may be announced next week

Oil and gas firms working on a project to build a liquefied natural gas (LNG) export plant in Tanzania have picked a location, and the government has asked them to make their plans public as early as next week, Tanzania's energy minister said.

An announcement of a site could be a major milestone for the project, even though a final investment decision is not due for years. Only a few LNG export projects have won a final investment decision over the past two years.

"The location of the plant will be left to the companies - BG, Statoil and their partners Exxon Mobil and Ophir," Minister Sospeter Muhongo told Reuters on Friday on the sidelines of a conference in Oslo.

"They have now selected one site and we've told them to make an announcement, and I'm hoping they'll do it next week," Muhongo said.

Tanzania and neighbouring Mozambique are in a race with Russia, Australia and Canada to build LNG export plants, aiming to exploit a gap in global supply that is expected to open up by 2020.

Tanzania estimates it has 42.7 trillion cubic feet of gas following big finds off its southern coast.

Tanzania's deputy minister for energy and minerals said in November the southern region of Lindi was being considered for the location of the LNG liquefaction plant.

Such a decision could cause controversy in nearby Mtwara, which has been the supply base for offshore exploration and where residents have protested that they have not received a big enough share of the benefits.

Muhongo said the government supported the firms' choice of location, considering it a professional decision, and that he planned to meet with the oil firms in April to draw up a timeline for development.

"I'm meeting with them in April, including Statoil and BG, and I want them to submit an implementation plan," he said. "The time frame will be like for other similar facilities."

Muhongo said the oil industry's reduction in capital spending plans would not affect the plant, given the booming demand for LNG.

"The demand for gas, LNG is increasing. There are new players coming from Asia and Europe, so there is no risk of a delay," he said.

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