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Tanzania May Ask BG, Statoil to Unify LNG Project Development

Aug. 1 (Bloomberg) -- Tanzania, holder of the second-largest natural-gas resources in East Africa after Mozambique, may ask Statoil ASA and BG Group Plc to join forces to develop a liquefied natural-gas export project.

State-owned Tanzania Petroleum Development Corp. plans to hold talks with explorers and may get them to co-operate rather than build several LNG plants. That would save costs, said Kelvin Komba, principal petroleum geologist at TPDC.

“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,” he said in an interview this week.

Statoil, which is teaming up with Exxon Mobil Corp., in June said the Lavani discovery increased estimated resources to about 9 trillion cubic feet of gas, enough “for a commercial development.” BG and Ophir Energy Plc are drilling the Papa-1 well, which is targeting 3.1 trillion cubic feet and could help justify a two-train LNG plant, said Ophir’s Chief Executive Officer Nick Cooper.

“The real scope for opportunity for a common project would be with” BG, John Knight, an executive vice president on global strategy at Statoil, said in June. “Between ourselves and BG we’ve got a lot of experience in building both the onshore and offshore and the marketing of LNG.”

Kim Blomley, a spokesman for BG, declined to comment on the possibility of joint LNG development with other operators.

Proving Resources

“We are probably at a tipping point for two-train LNG, but it’s too early technically to say,” Cooper said in June. The partners need to complete the Mzia-1 well tests and Papa-1 drilling to access the resource potential, he said.

Shell, a member of joint ventures supplying 30 percent of global LNG, is exploring for oil and gas off Tanzania with Petroleo Brasileiro SA.

“East Africa is an interesting province,” Shell CEO Peter Voser said July 26. “It’s a big resource, needs obviously skills.”

Tanzania is getting assistance from the World Bank on its gas industry master plan development. The European Union is also advising Tanzania on developing gas policy, which will outline infrastructure investments, resource revenue management, environmental protection and some other issues, Filiberto Ceriani Sebregondi, the EU’s ambassador to Tanzania, said in June.

The National Gas Company of Trinidad and Tobago Ltd. had also proposed Tanzania help with the gas industry development.

To contact the reporter on this story: David Malingha Doya in Dar es Salaam via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.

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