Statoil, Tanzania Will Begin Talks About LNG Plant This Month

Tanzania’s national oil company said it will start talks this month with Statoil ASA about building a liquefied natural gas plant in the East African country.

“We are expecting a delegation from Norway in August for inception talks,” Kelvin Komba, principal petroleum geologist at Tanzania Petroleum Development Corp., said in an interview from Dar es Salaam, the commercial capital, on July 30. Statoil is Norway’s largest oil and gas producer.

Explorers have flocked to East Africa over the past six years, spurred by the discovery of oil in Uganda in 2006, increasing natural-gas reserves in Tanzania and the first crude discovery in Kenya in March. Statoil, which together with Exxon Mobil Corp. has discovered as much as 9 trillion cubic feet of gas off Tanzania’s coast, confirmed it’s talking to TPDC about the possible development of the LNG facility.

“We have a sound dialogue with TPDC, Tanzanian authorities and other relevant stakeholders regarding a possible LNG development in the country,” Fredrik Norman, a spokesman for Stavanger, Norway-based Statoil, said in an e-mailed response to questions on July 26. “We are currently in an early phase of evaluating the concept selection for a possible LNG plant.”

BG Group Plc, which along with partner Ophir Energy Plc has discovered an estimated 7 trillion cubic feet of recoverable resources in Tanzania, said it has also been evaluating potential locations for an LNG export-facility.

Potential Sites

“We have been working with the government of Tanzania for some two years now, including identifying potential sites, and we will continue this work in parallel with our exploration efforts,” Kim Blomley, a spokesman for BG Group, said in an e-mailed response to questions July 24.

Komba said Tanzania’s government is in the process of drafting a gas policy and other laws that will guide development of the industry. The government may require the developers of LNG plants to satisfy local demand for the product before export and to co-develop one LNG plant, instead of building several sites to cut costs, Komba said.

“This will be cost effective, and it works for us, because it is government that will pay for the plants through foregone revenue in companies recovering costs,” Komba said.

PanAfrican Energy Tanzania Ltd., Orca Exploration Group’s domestic unit, is producing gas from the Songo Songo gas field whose reserves are estimated at 879 billion cubic feet. Most of the gas is supplied to power generators and less than 40 industrial users, according to information on PanAfrica’s website.

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