By Allan Olingo

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Tanzania is looking for a transaction adviser for its natural gas project, raising hopes that the $30 billion project is entering a crucial stage of development.

The search for consultancy services comes barely a month after one of the gas pipeline development partners indicated that it would be signing the Host Government Agreement with Tanzania later this year.

Now, Tanzania Petroleum Development Corporation (TPDC) is seeking a transaction adviser to support the government negotiation team.

“The work of the transaction adviser would include developing a commercial, legal and technical framework for the LNG project, building capacity and supporting the government team, and devising the best approach for negotiating the host government agreement,” TPDC said in a notice, adding that the contract will last two years.

Tanzania needs more than $30 billion to build a gas plant with an export terminal. The country expected to construct a liquefied natural gas plant from the start of this year, with a target completion of 2024.

Loan

Last year, Dar received a $29.8 million loan from the African Development Bank (AfDB) for the project.

“The approved project will help Tanzania capture the best value from their natural gas resources through a sound regulatory framework to manage natural gas reserves, as well as support for government negotiation teams to ensure the country gets the best deals and local content policies formulation to create jobs in the gas sector,” said AfDB’s country manager for Tanzania Chidozie Emenuga.

Dar is expected to use part of these funds to contract the transaction adviser.

The LNG project involves gas from Shell-operated blocks 1 and 4, given that the Statoil-operated Block 2 is being piped from deepwater subsea wells to two-or-three trains at an onshore liquefaction plant at Lindi.

In March, Ophir Energy chief executive Nick Cooper indicated that together with Shell, his firm would be signing a Host Government Agreement later this year.

“Since 2015, we have seen the project go quiet as the works centred on host government negotiations, engineering studies and discussions between Shell and Statoil around unifying the project.

“The partners have also been waiting for a price signal from the commodity market to get the project moving, and now we can make something quite material out of this asset in the next two to three years, with a possibility for fast-tracking the project,” Mr Cooper told the Upstream Magazine, adding that the partners have already engineered costs out of the scheme so it is actually quite cost effective at current prices.

Challenges

The project has been delayed by land acquisition wrangles, legislation challenges within its hydrocarbon industry and the low gas prices that made the development less feasible.

TPDC has since acquired the title deed for the 2,071 hectares set aside for the construction of the planned LNG terminal at Likong’o in Lindi.

Shell with its partner Ophir Energy have already invested over $1 billion to fast-track the exploration appraisal  programme. The firm, which owns 16 wells for block 1, 2 and 3, which contain an estimated one third of Tanzania’s gas reserves.