Tanzania to pen accords with Equinor, Shell on $40bn LNG project next year, govt official says
Tanzania will sign key agreements with Shell and Equinor on the development of a $40bn LNG export terminal, the nation's energy minister January Makamba told Bloomberg on November 7, raising hopes that the long-planned project may finally move towards realisation.
"It's happening," January Makamba told the news group in an interview in Sharm el-Sheikh, Egypt, where he is taking part in the COP27 international climate summit. "In December, we will conclude the conversation. We are in the fiscal package discussions now."
The accords will include a final host government agreement, setting out the project terms, as well as the project law and benefit-sharing agreement, according to the minister. He said that a final investment decision on development could be reached in the beginning of 2025, with exports starting before the end of the decade.
The terminal is currently expected to have a capacity of 15mn metric tons per year of LNG, underpinned by gas resources at three blocks. Other project participants include ExxonMobil and Pavilion Energy.
The project has long been planned, but has been held up by regulatory delays, wrangling between the government and its investors over terms and concerns about its economic feasibility. Equinor wrote $982mn of value off its books in January 2021 after concluding that the project was uncompetitive compared with the rest of the company's portfolio.
However, international gas prices have soared since then, raising fresh hopes for a number of previously stalled projects in Africa.
A breakthrough for Tanzania LNG came in June, when the government signed an initial framework agreement with Equinor and Shell. The African Energy Chamber, which promotes greater investment in the continent's oil and gas resources, hailed the deal as "a significant step towards establishing a strong African gas market on the back of large-scale LNG projects.
In another sign of progress, Tanzania's president Samia Hassan signed an agreement with his counterpart in neighbouring Kenya William Ruto in October on building a pipeline to pump Tanzania's gas to Kenya. But neither side has suggested a timeframe for the project's realisation.