The project will be second in size only to Qatar’s Ras Laffan. With partners from Thailand’s, India’s and Japan’s national companies, Anadarko’s LNG project is the first without dominant involvement of a super major. In Tanzania, Singapore’s Pavillion Energy invested $1.28bn for a 20% stake in Ophir’s fields. By securing stakes in East Africa, Asian governments are hedging against future LNG prices. Related: Could The New Silk Road End Old Geopolitical Tensions? Shell’s acquisition of BG Group is welcomed in Tanzania. Regional industry commentators suggest that Shell’s expertise in dealing with national governments, technical know-how and “appetite for risk” will boost Tanzania as it competes with Mozambique for limited capital. It might be too optimistic that Shell’s entry into Tanzania will have any immediate impact on projects currently in development. It is likely distracted with the merger details. BG Group continues with its pre-front end engineering and design (FEED) studies of its proposed Tanzania LNG project with plans to enter FEED in 2016. Meanwhile, in its first quarter 2015 earnings call, Anadarko dismissed all suggestions that it was seeking to monetize its Mozambique assets and noted that all indicators (e.g. reserve certifications, project financing, and securing off-take) remain positive for submitting a Plan of Development to Government of Mozambique in fall 2015 and getting to Final Investment Decision (FID) later in 2015 or 2016. It announced in mid-May that it had selected a FEED contractor for its onshore LNG park in Mozambique. Moving forward with this mega project is a major statement by an independent as majors have stalled or canceled projects as oil prices have declined. In 2015, Statoil, BP and ExxonMobil have announced $45 billion in cuts in LNG projects. Related: A New Giant Among Oil Traders Even with such cuts, Tanzania and Mozambique are competing with a lot of planned supply all chasing Asia’s softer demand. Four US and Australian LNG projects are expected to come online in the next four years. Australia, currently the fourth largest LNG exporter, is planning to invest A$200 billion in the next wave of LNG projects as it presses to become the world’s third largest LNG exporter. It worries that low oil prices and high costs of development in Australia, undermine its geographic advantage to Asian LNG markets, compared to East Africa’s lower costs. That gives Tanzania and Mozambique advantages over their competitors. But there are still serious obstacles. The gas fields are in remote areas with little or no infrastructure. Gas sector production regulation is still being developed. Those challenges will need to be overcome if East Africa’s LNG potential can be realized. By Ronke Luke Of Oilprice.com More Top Reads From Oilprice.com:
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