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Temasek boosts LNG hub drive with S$1.6b stake in Tanzania

SINGAPORE — The Republic’s drive towards boosting energy security and becoming an Asian hub for trade in liquefied natural gas (LNG) has received a major boost after investment giant Temasek Holdings bought a stake in Tanzanian gas blocks worth US$1.3 billion (S$1.6 billion).

SINGAPORE — The Republic’s drive towards boosting energy security and becoming an Asian hub for trade in liquefied natural gas (LNG) has received a major boost after investment giant Temasek Holdings bought a stake in Tanzanian gas blocks worth US$1.3 billion (S$1.6 billion).

The deal will see Pavilion Energy, the LNG unit of Temasek, taking a 20 per cent share in three gas blocks offshore the East African country. The transaction, entered into yesterday with London-based Ophir Energy, which holds 40 per cent of the estimated 15 trillion cubic feet of gas in Tanzania Blocks 1, 3 and 4, is scheduled to be completed in the first quarter of next year. BG Group, which is based in Berkshire, England, owns the remaining 60 per cent.

“The natural gas developments in Tanzania hold tremendous potential not just for Pavilion Energy but for Singapore and Asia,”said Pavilion Chairman Hassan Marican.

The first deliveries from Pavilion’s Tanzanian fields are scheduled to start in 2020. The investment helps Pavilion diversify its supply of gas to meet growing Asian demand as Singapore vies to become an LNG hub. East Africa has seen some of the world’s largest gas discoveries over the last three years, including fields off Mozambique that are estimated to hold enough gas to meet global demand for two years.

“It’s a fairly bold move by Pavilion to buy into Tanzanian gas, as East Africa is virgin territory and the rules haven’t been written,” said Mr Tony Regan, a Singapore-based energy consultant at Tri-Zen International. “The governments of Tanzania and Mozambique are still setting up legislation and the domestic gas markets aren’t very big, so the price of cargoes produced and sold in East Africa will be quite attractive,” he added.

Singapore opened its first LNG terminal in May with an initial annual capacity of 3.5 million tonnes, which is scheduled to rise to 6 million tonnes by the end of the year. Gas supplied 84 per cent of Singapore’s electricity last year, according to the Energy Market Authority. BLOOMBERG

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