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Tanzania Seeks Consultancy Service Provider for Delayed LNG Project

Posted by April 13, 2018

© Mike Mareen / Adobe Stock

Tanzania has invited bids for consultancy services to help the government conclude negotiations with a group of international oil firms on a deal for the construction of a proposed liquefied natural gas (LNG) plant.

Tanzania boasts estimated recoverable reserves of over 57 trillion cubic feet (tcf) of natural gas.

Construction of an LNG export terminal has however been held up by regulatory delays.

BG Group (BRGXF), which was acquired by Royal Dutch Shell (RYDAF) in 2016, alongside Statoil (STO), Exxon Mobil (XOM) and Ophir Energy (OPHRY), plan to build a $30 billion onshore LNG export terminal.

The firms plan to develop the project in partnership with the state-run Tanzania Petroleum Development Corporation (TPDC) in the south of the country near large offshore gas discoveries.

TPDC said it was now searching for a consultant to develop a commercial, legal and technical framework for the LNG project.

"The objective of the assignment includes ... to build capacity and facilitate the government negotiation team (GNT) team and to devise the best approach to undertake negotiations of the host government agreement," TPDC said in a tender announcement on Thursday and seen by Reuters on Friday.

Tanzania's national oil company said the transaction advisor was expected to complete the work in two years.

A host government agreement is seen as a crucial step towards reaching a final investment decision for the long-delayed project.

Tanzania's LNG project has previously been held back by a bureaucratic land acquisition process and the protracted approval of a new legal and regulatory framework for the East African nation's nascent hydrocarbon industry.

Negotiations for a host government agreement were launched in September 2016 and were initially expected to be completed before the end of this year.

Industry players said a final investment decision on the LNG export terminal will not be made for at least four years and possibly much longer.

It would take another five years after the decision to build the plant.

Since coming into office in late 2015, Tanzanian president John Magufuli has ordered government officials to speed up work on the planned LNG plant, saying implementation of the project had already taken too long.

The country's central bank believes just starting work on the plant would add another 2 percentage points to annual economic growth of around 7 percent.

By Fumbuka Ng'wanakilala

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