* Statoil, BG to advise Tanzania on location in second
* 'Ballpark figure' for plant costs is $10 billion
* Investment decision not seen before at least early 2016
By Gwladys Fouche and Balazs Koranyi
OSLO, March 18 Statoil and Britain's BG
Group plan to build a $10 billion East African liquefied
natural gas (LNG) terminal well placed for exports to Asia,
after the Norwegian company made a new find off the coast of
"We have enough gas to move forward," Statoil's head of
exploration, Tim Dodson, said on Monday after it announced the
discovery of between 4 trillion and 6 trillion cubic feet (tcf)
of gas in the Indian Ocean.
"We are working with BG to come up with a recommendation for
a landing site. We should be making that recommendation to
Tanzanian authorities fairly early in the second quarter,"
Dodson told Reuters.
The latest find, Statoil's third in the area within a year,
brings its total recoverable resources there to 10-13 tcf.
BG has interests in three blocks off Tanzania
together with Ophir Energy.
On Monday, BG announced that results from its Jodari well
drilled off Tanzania, near Statoil's own finds, were
The U.S. Geological Survey has estimated that more gas lies
off the shores of Kenya, Tanzania and Mozambique than off
Nigeria, Africa's biggest energy producer.
East Africa is attractive to oil firms because of its
relative proximity to Asia's big LNG consumers.
To allow exports of the fuel to major markets, there will be
a need for installations to turn gas into freezing liquid for
transport by ship. Statoil and BG are on course to build one of
Anadarko and Eni are planning to build an
LNG export terminal in Mozambique.
The plant to be built by Statoil and BG would have at least
two processing units, or trains, to process gas from Statoil's
Block 2 and BG's Block 1.
"In addition to the 10-13 tcf that we have, they (BG) have a
similar kind of number (in Block 1)," said Dodson.
"So if we have 20 tcf, there will be a discussion on whether
you develop all of that straight away or whether you build two
trains and then add a potential third train, or even a fourth."
Statoil would extract the gas from the seabed via a big
offshore development before piping it to the export terminal on
land, Dodson said.
He said $10 billion was a fair ballpark estimate for the
cost of developing the plant. An investment decision would be at
least three years away, not before early 2016, he added.
Statoil operates the hydrocarbon licence for Block 2, with a
65 percent working interest, and ExxonMobil holds the
remaining 35 percent.
There is political risk to the project, with oil and gas
becoming a divisive issue in Tanzania.
While oil and gas could be a much-needed source of revenue
for the developing country, there are fears energy could prove
to be a "resource curse", bringing the kind of unrest
experienced by Democratic Republic of Congo and Nigeria.
In the southern region of Mtwara, residents are threatening
to block a gas pipeline project until they see more of the
The government has accused opposition leaders of inciting
opposition to the pipeline, which it hopes will boost generation
of cheap electricity and end chronic energy shortages.
Opposition politicians and activists have been calling for a
halt to the issuance of oil and gas exploration licences until
Tanzania revamps laws regulating its fast-growing energy sector.
The government has unveiled a draft national gas policy and
plans to have new legislation in place this year.
Statoil has drilled five wells off Tanzania so far and
expects further wells this year, most likely towards the end of
the year after geologists analyse data provided from fresh
three-dimensional seismic surveys this summer.
"We can expect more discoveries," Dodson said.
Statoil will also drill two wells off Mozambique, primarily
seeking oil, with drilling of the first well due to start in the
first week of April. There, again, Dodson saw potential for
In Angola, on Africa's west coast, Statoil hopes to drill
another well towards the end of the year. Dodson said he
believed there could be very big finds as the geology is similar
to the oil-rich pre-salt blocks off Brazil, across the Atlantic.