Tanzania Wants Joint LNG Development

With the number of massive natural gas discoveries taking place off the coasts of Mozambique and Tanzania a number of plans to commercialize these reserves are flying off the drawing board, with the majority of them (if not all) focused on LNG for export. Two of the companies who have recently made gas discoveries, Statoil and its partner ExxonMobil on Block 2 offshore Tanzania, are set to begin talks with the Tanzanian government later in August revolving around the construction of a facility for LNG export.  

The partners are looking to commercialize their two natural gas discoveries, the Lavani and the Zafarani, which have combined resources of around 9 Tcf.  

The Norwegian firm confirmed that it is currently in dialogue with TPDC and the authorities about a possible LNG facility, Bloomberg reported. “We are currently in an early phase of evaluating the concept selection for a possible LNG plant,” spokesman Fredrik Norman said.

“We are expecting a delegation from Norway in August for inception talks,” Kelvin Komba, principal petroleum geologist at TPDC, said the Bloomberg report.

Another partnership that has hit big off Tanzania’s coast is BG and Ophir Energy who, with the addition of the just announced Papa-1 discovery, are sitting on 10 Tcf or more in resources. The pair is also working on a commercialization plan and an LNG plant is at the top of the list to monetize their discoveries.

While both sets of explorers are drawing up their separate sets of monetization plans for the resources, the Tanzanian government may have some ideas of its own on how those plans move forward. TPDC is leaning toward a joint development project between the Statoil/ExxoMobil and BG/Ophir partnerships. The state-run firm believes it would save costs to build one plant, rather than have several facilities.

“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 in an interview with Bloomberg.

South of Tanzania, Mozambique has racked up even more reserves between two separate exploration programs led by ENI and Anadarko. Both companies have LNG facilities on the drawing board for their discovered reserves. ENI has an estimated 70 Tcf of gas in place from its exploration program to date, this includes its just announced Mamba North East-2 discovery. While Anadarko’s exploration program to date has netted it between 30 and 60 Tcf, including its June Atum discovery, the Offshore Area 1 acreage has an upside potential of 100 Tcf.

Between the two exploration programs Mozambique has more than enough resources to feed two LNG facilities, while a joint LNG project has been batted around none of the talk has come from either company. Anadarko has already begun handing out contracts for its planned facility, with the pre-feasibility study going to KBR in April of this year and will most likely be the first in Mozambique to pull the LNG trigger.