LNG Facility in Tanzania

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LNG or Liquefied Natural Gas, is a clear, colourless, non-toxic liquid, produced by cooling natural gas to -260° Fahrenheit (-160ºC), at which point it becomes liquid. [1] This process occurs to allow for more efficient transport of natural gas, either by truck or by sea. [2]

LNG takes up 600 times less space than natural gas in its gaseous form. [3] Converting natural gas into LNG can make stranded natural gas deposits more economically viable, as constructing pipelines can be expensive. In addition, LNG will not explode in an unconfined environment, so in the unlikely event of an LNG spill, the natural gas has little chance of igniting an explosion. Other benefits of LNG include the fact that the liquification process removes oxygen, carbon dioxide, sulphur and water from the natural gas, resulting in LNG which is almost pure methane. [4] Once it reaches its destination, LNG is stored in its liquid form until it is warmed back to natural gas via the process of regasification. [5]

Overview LNG facility Tanzania

Tanzania’s natural gas deposits have attracted the attention of a number of major energy companies such as Equinor, Shell, Ophir Energy, ExxonMobil and Pavillion Energy which are collaborating with the Tanzania government over constructing an LNG plant. [6] In August 2016 Equinor (formerly Statoil) announced that the construction of the plant is expected to take up to 40 months and will cost US $ 30billion with production expected to commence in 2021 or 2022. Once completed, the LNG plant is expected to operate and produce LNG for at least 40 years.[7] The plant will receive and treat reservoir gas from the fields in blocks 1, 2, 3 and 4.[8] In July 2017, it was announced that the Government of Tanzania together with Shell, Statoil, Exxon Mobil and Ophir Energy started to establish a commercial framework for the project, outlining rights and obligations of all involved parties. [9] The Tanzanian Minister of Energy announced in June 2018 that the construction of the LNG plant will commence in 2022 and that the international firms that are interested in the project are currently competing on who will lead the execution of the project. Earlier the same month, news that Exxon Mobile is planning to sell its stake in Block 2 caused concerns over the future of the LNG project.[10]

Liquefied Natural Gas (LNG) Transaction Advisor for Government Negotiation Team

On April 12 2018 the Tanzania Petroleum Development Corporation (TPDC) advertised a tender for the provision of advisory services to the Government of Tanzania on the execution of the liquified natural gas (LNG) project in Lindi. The consultant is expected to support the Government Negotiation Team and conclude negotiations with international oil firms on the construction of the LNG plant.[11] The tender is sponsored by the African Development Bank. The objectives of the assignment are as follows:[12] i. To develop a workable commercial, legal and technical framework/terms for the LNG project; ii. To build capacity and facilitate the GNT team, and iii. To device the best approach to undertake negotiations of the Host Government Agreement (HGA). After the closing of the tender on May 1st 2018, TPDC announced that it had received bids by 64 local and foreign companies. [13]


The Government of Tanzania favours an onshore liquefied natural gas plant, as opposed to an offshore plant currently being planned by investors in neighbouring Mozambique. [14] According to Mark Todd, BGs former External Communications Manger, BG and Statoil had sent a joint proposal on the suitable site for the plant and are awaiting feedback from the Government of Tanzania. [15] Statoil and BG prefer the LNG plant to be located at Likong’o-Mchinga in the southern town of Lindi. However, the decision to build the plant in Lindi might foment resentments among people in Mtwara as the government had promised Mtwara residents in June 2013 that the plant would be built in their area to foster economic growth. [16] According to some sources, the LNG decision is shrouded in secrecy because of concerns people would begin buying up land around the site to sell on to the developers at an inflated price.[17] On December 2015 TPDC announced on its website that it had acquired the title deed to the land for the LNG plant at Likong’o village in Lindi. The land has a total size of 20,172 hectares set aside for the LNG plant and a further 17,000 hectares nearby reserved for industrial use. [18] In mid 2016 TPDC announced that an environmental impact assessment (EIA) will commence in late August of the year. At the same time the Development Report Induction Plan was supposed to be undertaken. It was further announced that the two studies would be conducted over a period of three months and will determine whether it is viable to develop the project at the identified site. Only after completion of the studies the compensation process of people whose land will be taken can be started. [19] The environmental impact assessment is divided into two segments. Firstly, the Free Front End Engineering design and secondly the Front End Engineering design. The second will mostly entail an engineering design and approach and detailed information on the project expenses. [20]

LNG Market

In all likelihood, Asia will be the main market for LNG from Tanzania. Geographically, Tanzania is ideally placed to supply LNG to the Asian market that heavily relies on LNG imports. [21] Asia’s fast growing economies will be the main drivers of growth in global gas demand in the next decade, according to global management firm McKinsey. Forecasts from the US Energy Information Administration (EIA) suggest that demand in Asian countries that are not part of the OECD will grow by 4.5 percent between 2010 and 2035. The countries, which include China, India and Indonesia, would see demand rise from 350 billion cubic metres per year in 2012 to 870 billion cubic metres per year in 2030, accounting for more than a third of gas demand in that period. [22]

Distance to LNG Markets


However, Tanzania faces competition from Mozambique to be the first to export gas from East Africa. Tanzania will also have to compete with Qatar and Australia, the current biggest LNG exporters. According to analysts, LNG from Tanzania will be cheaper than LNG from Australia, but such an advantage might be annihilated if Tanzania is unable to develop its potential before a glut of other new supplies depresses prices. [23] Furthermore, a paper for Columbia University’s Center on Global Energy Policy found that US natural gas exports would dim East Africa’s prospects in the global LNG market. The US witnesses a strong growth in natural gas output due to the fracking revolution. [24]

Policy challenges

The ongoing uncertainty about the Tanzania constitution is likely to delay the LNG project. Without clarity on new regulations for the natural gas sector, international companies are likely to delay final investment decisions, according to different analysts. [25] Critics state that the current uncertainty is forcing interest groups to take a stand on all the most divisive political issues concerning the country’s hydrocarbon resources at once. In this climate, introducing new terms to govern the natural gas sector will be politically difficult, hence making the enactment of a new bill unlikely in 2014. [26] However, in August 2015, President Kikwete ascended the three bills into laws: the Oil and Gas Revenues Management Act 2015, the Petroleum Act 2015 and the Tanzania Extractive Industries (Transparency and Accountability) Act 2015. [27]


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  12. Institutional Support Project For Domestic Resource Mobilization And Natural Resource Governance”, “Tanzania Petroleum Development Corporation”, retrieved 20th August 2018
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  27. Kikwete ceremoniously signs petroleum bills”, “Oilprice.com”, retrieved 5th September 2015.