Page 7 - GLNG Week 24 2022

GLNG COMMENTARY GLNG

gas-bearing blocks, he identified Tanzania’s
status as a “nascent, undeveloped and inexperi-
enced host country” as a bigger problem than the could follow the examples set by other countries
nature of the assets themselves. such as Mozambique and Senegal, which are pre-
“The gas is also deepwater, which doesn’t nec- paring to launch floating LNG (FLNG) projects,
essarily push up complexity – particularly for the or the Republic of Congo (ROC) and Maurita-
operators, which are experienced and capable in nia, which have arranged to use the Fast LNG
that environment – but it does push up costs,” he modular solution offered by US-based New For-
commented. tress Energy (NFE).
On the positive side, both FLNG and mod-
Unfortunate timing ular LNG solutions tend to be cheaper, easier
One problem for Tanzania, of course, is that the and faster to build than the large-scale gas lique-
longer it must wait to bring its gas resources on faction plants envisioned in the Tanzania LNG
line, the harder it will be to take direct advantage scheme, with modular LNG solutions having an
of the current heightened demand for new gas even bigger edge than FLNG. But on the nega-
suppliers. tive side, FLNG and modular LNG plants tend
Thomson noted that challenge, pointing out to be considerably smaller than large onshore
that if Tanzania LNG came online around 2030, facilities – and again, the difference is even more
it was likely to face competition from other pro- stark with modular solutions.
ducers that would have already succeeded in Moreover, Thomson noted that switching to
capturing many of the same markets it was tar- another type of gas liquefaction facility (or, pre-
geting. These include companies based in Qatar sumably, even adding one into the mix) would
and the US that already have key advantages likely lead to further slow-downs for the project,
such as established high-capacity LNG export partly because of the need for more negotiations
systems, plans to add extra capacity by the end and partly out of concerns related to economy
of the decade and long-standing reputations of scale. Also, Tanzania’s government might not
as reliable suppliers, he said. They could also be willing to approve such a shift, as it sees the
include producers in Mozambique, Tanzania’s large-scale onshore liquefaction plant as a means
neighbour to the south, which is due to see its of accomplishing its economic goals, he said.
first LNG project come on line later this year, he “Possibly, but this would require a full
added. re-design of the possible development,” he told
Meanwhile, competition from other LNG NewsBase when asked whether an FLNG or
producers is not the only factor, he added. Tan- modular solution would help with fast-tracking
zania LNG will also have to cope with deadlines Tanzania LNG. He continued: “Tanzania wants
for carbon emissions reductions, he explained. an onshore project to support domestic growth
Since many EU member states have committed and jobs. Also, given Tanzania’s very large gas
to making major cuts by 2030 and achieving reserves, it would likely highly benefit from the
net zero by 2050, European gas demand may economies of scale of a large onshore LNG pro-
not remain strong enough through the 2040s to ject, rather than a small FLNG project, from a
sustain the kind of long-term supply contracts cost and profitability perspective.”
needed to support an FID, he said. As such, there is a chance that Suluhu’s
administration may be throwing its weight
A way out? behind a deal that does not reach its full poten-
There is, potentially, an alternative. Tanzania tial, owing to unfortunate timing.™

Week 24 17•June•2022 www. NEWSBASE .com P7