The government is expected to start an environmental impact assessment (EIA) at the end of this month on land where a $30 billion (Sh64.4 trillion) liquefied natural gas (LNG) project will be undertaken.
The site identified by the government is at Likong’o Village in Lindi Region. Tanzania has more than 55 trillion cubic feet of natural gas reserves.
BG Group, being acquired by Royal Dutch Shell, along with Statoil, Exxon Mobil and Ophir Energy plan to build the onshore LNG export terminal in partnership with the Tanzania Petroleum Development Corporation (TPDC).
TPDC principal petroleum engineer Modestus Lumato told BusinessWeek that the EIA is expected to start soon and will go parallel with the Development Report Induction Plan.
He said the two studies which will be conducted for three months to determine whether it is viable to put up the project on the area.
“We expect to finalise the implementation of the primary investigations by the end of this year,” he said. “After the EIA is completed we will then start compensating people whose land will be taken.”
He said the government chief valuer had approved compensation for people who will be moved from their lands to pave the way for the project.
Asked how much would be involved in the compensation, he said it would be known when the process starts.
TPDC has to go through the report and determine how much will be paid.
“We are first dealing with the EIA process before we endorse the compensation process.”
Reports show that TPDC owns a title deed for 2,071.705 hectares for constructing the project.
Another 17,000 hectares will be for an industrial park.
However, he said several studies would be conducted before determining whether to go on with the construction or not. The first study is known as the Free Front End Engineering Design which would be followed by the Front End Engineering Design (FEED) that mostly entails an engineering design approach to control project expenses.
Mr Lumato explained that the completion of the FEED process is important to determine the outcome of the project before jumping in for the final investment decision in order to commence with construction.
A University of Dar es Salaam senior lecturer, Prof Haji Semboja, sees the LNG project as viable to bring multiple opportunities. “The construction of the LNG project is a long process and is mostly funded by the multinational companies, and if they are ready to go along with the project, the government should fast track the construction of the project to ensure we enjoy the opportunities available.”
Until 2014, it was being estimated that the development of a $30 billion LNG plant would create over 10,000 new direct jobs and thousands more indirectly.
It would also enable the country to collect billions in taxes (10 per cent of the profit obtained) which will help among other things, to service national debt and fund healthcare and education in Tanzania.
But as plans to construct the plant and ship liquefied gas gather momentum, the promising industry could be forced to confront many challenges that affect LNG developers around the world.
Lack of enough human resource capacity in project development is exactly the biggest challenge facing the country today from developing an LNG plant.
And failure to act quickly means the huge opportunity could go to competitors in other part of the world.
There are very limited numbers of engineering, construction and procurement firms that specialise in building liquefaction plants in the country.