By George Mwangi
Special to DOW JONES NEWSWIRES
Tanzania has a good chance of becoming a major producer and exporter of natural gas over the next decade, said the International Monetary Fund.
Significant offshore discoveries have been made over the last two to three years and further exploration is underway, the fund said in its recent country report for Tanzania.
"Although gas resources haven't yet been declared commercially viable, estimates of discoveries indicate recoverable offshore gas resources of at least 24 trillion-26 trillion cubic feet, potentially sufficient for a four-train Liquid Natural Gas plant (possibly as a common facility for several upstream gas fields)," it said. "A final investment decision is expected at the earliest in 2016 or 2017."
Total investment during the development phase could amount to $20 billion-$40 billion, depending on the scale of the project. This would be the largest investment ever in Tanzania, with gas production starting in the 2020s, the IMF said.
"This is beginning to generate expectations that greater spending is warranted by likely future revenues," the fund added. "However, a final decision on whether to develop a large-scale liquefied natural gas project using offshore gas resources may not be made by the natural gas companies until 2016."
Also, the decisions to be made in the next few years--concerning contracts and management of revenue--will have long-term implications on whether the ensuing benefits from natural gas will accrue to all citizens, the IMF said.
"A sharp slowdown in China, on the other hand, would reduce prospective FDI (Foreign Direct Investment) and credit flows to Tanzania, undermining key infrastructure investments and thereby future growth," it said.
Norway's largest energy company Statoil ASA (STL.OS), U.K.-based BG Group PLC (BG.LN) and Exxon Mobil Corp. (XOM) are planning to build the first liquefied natural gas plant in the East African nation to export natural gas.
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