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Tanzania rejects demand to alter rules of gas project

Saturday April 23 2016

The Tanzanian government has rebuffed efforts by oil companies developing the country’s liquefied natural gas project to alter the Petroleum Act of 2015 at the forthcoming Host Government Agreement (HGA) talks.

The director of upstream business at the state-owned Tanzania Petroleum Development Corporation (TPDC), Kelvin Komba, told The EastAfrican that no amendments will be made to the production sharing agreements (PSAs).

International oil firms Statoil and ExxonMobil have delayed the LNG project citing new issues introduced in the Petroleum Act, and the lack of harmonised PSAs, which they want addressed at the HGA talks.

READ: New law delays Dar’s gas plant project

Statoil Tanzania spokesperson Genevieve Kasanga said each player in the LNG project holds a differing PSA with differing negotiated agreements, which they want harmonised.

Ms Kasanga said the HGA talks will also look into the regulation of the LNG project, confirmation of the tax and fiscal conditions, the commercial structure of the project and the tariff system.

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Timelines

The oil companies had originally planned to finalise the project concept by the third quarter of 2014, make the final investment decision in the second half of this year, and award the engineering, procurement and construction contracts in time to ship the first vessels of gas from the LNG plant by 2021.

Mr Komba confirmed the LNG project delay, but said that nothing from the Petroleum Act of 2015 had so far contributed significantly to a delay.

“The delay over the land issue was sorted after TPDC was awarded a land title for the project,” said Mr Komba.

The director of upstream business said that the engineering works would not begin mid-this year as ongoing processes needed to be finalised.

He cited land compensation issues, the need for the oil companies to conduct due diligence on the land acquisition process, the need to decide how the resettlement will be carried out and the need for TPDC to allow the firms access to the project site, as well as getting the HGA talks underway.

“The oil companies have been requesting clarifications on some issues particularly on local content; most of the issues regarding the Petroleum Act 20 15 will be discussed during the HGA meeting. The discussion will include issues arising from the signed PSA,” said Mr Komba.

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