Statoil, BG to Build Tanzania LNG Plant in Lindi, Minister Says

Statoil ASA (STL) and BG Group Plc (BG/) will build Tanzania’s first liquefied natural gas plant in Lindi and are due to meet with authorities about the project’s schedule and details in April, Energy Minister Sospeter Muhongo said.

The two companies will announce the site decision next week, Muhongo said in an interview in Oslo today. Statoil declined to comment, spokesman Knut Rostad said by phone.

Statoil, which has discovered as much as 20 trillion cubic feet of natural gas in Block 2, and BG, which says recoverable volumes are as much as 15 trillion cubic feet in three neighboring blocks, plan to build an LNG plant to export gas to Asia, profiting from rising demand in the region. Statoil, Norway’s biggest energy company, is targeting another 5 to 15 trillion cubic feet as it plans as many as a dozen wells off Tanzania over the next two years, head of exploration Tim Dodson said last week.

Production could start in 2021 or 2022 and investments could be $20 billion to $30 billion, Statoil has said. Partners in the offshore blocks include Exxon Mobil Corp. (XOM), Ophir Energy Plc (OPHR) and Pavilion Energy Pte.

Tanzania’s government hopes Statoil and BG, which operate their respective blocks, will decide to build the plant with “at least” two trains, Muhongo said.

Tanzania, which has the largest gas reserves in east Africa after Mozambique with 46.5 trillion cubic feet, expects that figure to exceed 100 trillion cubic feet within the next two to three years, Muhongo said.

Bidders in the country’s licensing round started last year will be announced May 15, Muhongo said, adding he “suspects” Statoil to be among them.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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