DAR ES SALAAM, May 9 (Reuters) - Tanzania plans to spend 12billion shillings ($6 million) in the next fiscal year to buyland for the planned construction of a liquefied natural gas(LNG) terminal, raising hopes it is speeding up progress of thelong-delayed project.
The two-train onshore LNG export terminal, which thegovernment says could cost up to $30 billion, has run intodelays mainly due to complex land acquisition procedures and anuncertain legal and regulatory framework.
Along with neighbouring Mozambique, Tanzania is in a racewith Russia, Australia, the United States and Canada to buildLNG export plants, aiming to exploit a gap in global supply thatis expected to open up by 2020.
"The government has set aside 12 billion shillings in2015/16 for assessment and compensation of 450 people ... wherethe (LNG) terminal will be built," the government's planningcommission said in a report seen by Reuters on Saturday.
The 2015/2016 fiscal year starts on July 1, 2015.
The terminal would be built in the small southern town ofLindi, located close to an offshore deep-sea region where hugenatural gas discoveries have been made.
Tanzania is estimated to have more than 53.2 trillion cubicfeet (tcf) of gas reserves off its southern coast, but itsenergy sector has long been dogged by allegations of graft andother problems.
Tanzania's parliament last year accused senior governmentofficials of fraudulently authorising the transfer of at least$122 million of public funds to a private energy company. Threecabinet officials, including the energy minister, lost theirjobs.
Analysts said the graft accusations, coupled with delays inpassing new gas legislation, are holding back the development ofthe sector.
British gas company BG Group, together with partnersStatoil, Exxon Mobil and Ophir Energy,plans to build an LNG export terminal, expected to startoperating in the early 2020s, but a final investment decision isonly set for 2016.
Royal Dutch Shell agreed to buy BG Group last monthfor $70 billion in the first large oil merger in more than adecade, giving the Anglo-Dutch company access to BG'smulti-billion dollar projects in Tanzania.($1 = 1,980.0000 Tanzanian shillings) (Reporting by Fumbuka Ng'wanakilala; Editing by Edith Honan andDavid Evans)
