The Tanzanian government has recently acquired an approximately 2,070 hectares land at a total investment of TZS 12 billion (USD 6 million) in Lindi town in Tanzania’s coastal southern region, for the construction of a liquefied natural gas (LNG) terminal to supply and tap raising demand from Asia.
The LNG terminal, to be constructed by Statoil ASA (OSL:STL) and BG Group Plc (LSE:BG), is expected to start production in 2021 or 2022 and the total investment is estimated to be between USD 20 billion and USD 30 billion.
In addition, an area of 17,000 hectares next to the terminal destined area has been secured for the development of an industrial park.
The LNG terminal, which would count with two trains to compress the natural gas into LNG, will not only used to boost gas exports but also to supply the industrial area and promote economic development by attracting investments to the country and adding 2.0% growth to the 7.0% growth estimated for the next years according to the Bank of Tanzania (BOT).
According to Bloomberg, the Tanzanian government is encouraging Statoil and BG Group to develop the at least two trains to foster operations and tap the 22 trillion cubic feet (tcf) and 16 tcf gas reserves found by both companies respectively.
The land acquisition comes almost two years after Tanzania’s Minister of Energy and Minerals, Prof. Sospeter Muhongo, announced in February, 2014, that both energy companies were evaluating the location and terminal’s specifications.
According to a statement from Tanzania Petroleum Development Corporation (TPDC), the government has set aside the TZS 12 billion to compensate 450 families in the acquired area as the law demands the land’s owner to pay compensation to the affected parties according to a valuation done by the Chief Government Valuer.
Tanzania has the second largest natural gas reserves in East Africa with 55 tcf so far discovered and behind Mozambique with 100 tcf according to the Energy Information Administration (EIA).