Tanzania to Commence Negotiations for its $30bn LNG Project in November 2021

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Tanzanian Energy Minister January Makamba has declared that negotiations would officially start on November 8 to get the Tanzania LNG project off the ground, according to Hawilti report.

This statement comes in-line following a meeting held in Dar es Salaam with Paul McCafferty, Equinor’s Vice President Exploration & Production International – Africa.

On October 4th, Tanzanian President Samia Suhulu Hassan and Minister Makamba had also held a similar meeting, virtually, with Shell’s CEO Ben van Beurden.

The development of the $30bn Tanzania LNG project in Lindi, in southern Tanzania, has been on the table for several years but talks had been suspended since the end of 2019. Last January, Equinor had even decided to write down the value of the project by $982 million, saying that its current economics did not justify keeping it on the balance sheet.

But things changed when President John Magufuli died in March and his Vice President Samia Hassan took over the country’s top job. She made a direct mention of the project during her inauguration speech, giving clear signals of her intention to revive it. Since then, the Government of Tanzania has had several talks and discussions with Equinor and Shell in order to address pending issues and pave the way for the project’s development.

Tanzania LNG would monetise almost 50 trillion cubic feet of gas (Tcf) discovered in offshore blocks 1, 2 and 4. Block 2 is operated by Equinor (65%) along with its partner ExxonMobil (35%) while the national oil company TPDC has the right to participate with a 10% interest. The partners have drilled a total of 15 exploration wells since 2011, resulting in nine discoveries with an estimated volume of over 20 Tcf.

On the other side, Blocks 1 and 4 are operated by Shell (60%) along with Singaporean partner Pavilion Energy (20%) and Indonesian partner Medco Energi (20%).

The base case development plan envisages a two-train onshore facility with a combined capacity of 10 million tonnes per annum (mtpa). On the Tanzanian side, hopes are that construction could start by mid-2023 for a commissioning by June 2028.

The US$30 billion Tanzania liquefied natural gas (LNG) project is a proposed gas project that has been in the cards since 2013 that involves the construction of an LNG plant at Lindi in Tanzania. According to Equinor an oil exploration company in Tanzania, the project is expected to generate significant long-term benefits to Tanzania through government revenues, gas for energy production, employment and development of the local economy.

The company says that the Project will be the first of its kind in Tanzania both in magnitude and size and could significantly contribute to the growth of the Tanzanian economy.

The LNG project is the viable solution to secure the development of the gas resources and maximize the value of the project for the government and for the companies responsible for the exploration and the development activities.

The company said that following the success of its exploration campaigns and as the operator of Block 2, it is preparing for the development of the gas resources which are located about 100km from the coast of Lindi, at a water depth of 2500 meters.