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(Bloomberg; Feb. 5) - BG Group will slow a natural gas project in Tanzania because of a lack of infrastructure and government capacity to handle large investments. BG won't use its drilling rig in Tanzania beyond June, Malcolm Brown, director of exploration, said Feb. 5. It will take more time building a "consensus" for the project, CEO Chris Finlayson said. BG, together with its partner, has found about 10 trillion cubic feet of gas off Tanzania, enough to warrant development of an LNG export terminal.

"The challenge ... is we're working in a country which has got a very undeveloped infrastructure and a very undeveloped civic capacity to absorb major investments," Finlayson said. "We do not want to get ourselves into another African country suffering from a resource curse." Resource curse describes an economic trap where dependence on mineral exports hurts other industries by boosting the currency and drawing workers from agriculture and business, making the country reliant on imports.

Tanzania last year ordered a review of production-sharing contracts with energy companies as it sought to reap more gains from its natural resources. Some politicians even called for a moratorium on offshore licensing to allow for the creation of industry legislation. The nation has postponed a bidding round pending the adoption of a gas policy by lawmakers. LNG plans may proceed more slowly than first proposed as the East African nation isn't prepared for such investments, according to BG.

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