Tanzania Needed to Underpin a $ 30 Billion Liquefied Natural Gas Project

ECONOMY:

Tanzania, Shell and Equinor have started negotiations on a critical host government agreement (HGA) needed to underpin a $30 billion liquefied natural gas project.

With Tanzania’s minister of energy targeting a rapid final investment decision, news of these talks came days after China’s CNOOC International committed itself to both the Kingfisher oil development in Uganda and the $3.5 billion East African Crude Oil Pipeline (EACOP).

The pipeline will transport billions of barrels of oil from Uganda to the Tanzanian port of Tanga.

The Tanzania LNG scheme was treading water under the administration of late head of state John Magufuli.

Since Samia Hassan became president she has spelled out her intention to propel the development towards first gas as soon as possible, charging Energy Minister January Makamba with hitting this goal.

A government delegation led by Makamba began talks yesterday with all the proponents of the challenging LNG project which involves transporting gas held in three deepwater blocks to a landfall at Lindi where a 10 million tonne per annum liquefaction plant is set to be built.

US supermajor ExxonMobil is Equinor’s partner in Block 2 which holds about 20 trillion cubic feet of in-place gas resources, about the same volumes as held in Shell’s blocks 1 and 4 where its partners are Singapore’s Pavilion Energy and Jakarta-based Medco Energi.

“Today I have opened a dialogue between the government and the Shell, Equinor, Pavilion, ExxonMobil and [Medco] companies on the Tanzania shilling 70 trillion [$30 billion] Lindi project — which will change the image of our economy,” Makamba tweeted.

“In the coming weeks, we will report on the opportunities that will be available during implementation,” he added.

“For the past two months, we’ve worked hard behind the scenes to get here [and] we’re confident that a final investment decision will come sooner than is traditionally the case.”

The HGA will underpin the entire project and will establish the commercial, fiscal and legal framework to ensure that the project can move ahead.

Tanzania Petroleum Development Corporation (TPDC), Tanzania’s state oil company, was ebullient about the HGA talks, saying that: “It’s on — LNG negotiations”, adding that “Tanzania is on track to claim its position as East Africa’s energy hub”.