Canyons to delay TZ natural gas project

GAS

The construction and completion of the Multi-billion dollar Liquefied Natural Gas plant in the Indian Ocean by the Tanzanian government is likely to take longer than originally anticipated due the availability of Canyons in the area.

The plant was due to be completed in 2020 but the investors and oil companies BG and Statoil and the government will have to address the Canyons issue quickly keep the project on track.

Venosa Ngowi, Senior Petroleum Geologist in the state-run Tanzania Petroleum Development Cooperation (TPDC) told editors’ forum in Bagamoyo the project has been “stalled” by existence of canyons offshore.

According to the Geologist, TPDC and oil marketing companies are now working together to resolve the challenge, however she acknowledged “more needs to be done.”

Tanzania holds the region’s natural gas reserves after Mozambique, having made possible discoveries of 55.2tcf.

Ngowi said there about 11 wells drilled already of which four are operational mainly to generate electricity highly needed for domestic and industrial use.

“Due to undisputed demands for stable power supply, TPDC has moved to even using a well in Mkuranga which is not economically viable for supplying gas … new offshore wells are not operational at the moment,” she said referring to the challenge of setting up an LNG facility.

Besides canyons, the two-train onshore LNG export terminal has run into delays mainly due to complex land acquisition procedures and an uncertain legal and regulatory framework.

Additionally, energy experts have warned the government not to rush with the project considering that oil and gas prices at the global market are not appealing.

Natural Resources Governance Institute (NRGI) Senior Regional Associate Silas Olan’g cautioned government not to make decision based on ‘pressure’ from oil marketing companies saying the government will likely to lose the most if prices of oil and gas stabilize at the global market.

“This is not a new thing. It happened during gold extraction, the government was pressurized and made uninformed decisions when the price of gold was not attractive at the world market … this is what will face Tanzania if it goes ahead and acts on pressure rather than facts ,” Olan’g told this website on the sidelines of the forum.
“A good investor won’t rush to make investment decision in the middle of deprived prices,” he added.