Tanzania LNG Project Negotiations with Shell and Equinor Concluded, Minister Says

The Minister of Energy of Tanzania Hon. January Makamba has said that the discussions on the Liquified Natural Gas (LNG) processing project between the Government and the consortium made of Shell, Equinor and their partners have been completed.

He added the experts are now at work drafting the contracts.

The LNG project, also known as the Likong’o-Mchinga Liquefied Natural Gas Project (LMLNGP), is a planned USD 30 billion liquefied natural gas (LNG) processing plant to be located in the Indian Ocean, opposite Tanzania’s main offshore gas exploration sites.

The Ministry of Energy of Tanzania first announced its intention to develop an LNG plant in Tanzania in 2014.

Following an extensive site selection process, a site was identified in the Lindi region to host the onshore LNG plant.

The project would involve the Tanzania Petroleum Development Corporation (TPDC) and the Government of Tanzania together with a number of international energy companies active in the country including Norway’s Equinor, and Britain’s Shell.

However, in 2019 Tanzania suspended talks with the foreign investors under the regime of the late President John Magufulito, to pave the way for a review of the country’s gas production sharing agreement (PSA).

In February 2021 Equinor decided to write down the book value of its Tanzania LNG Project on the company’s balance sheet by USD 982 million, attributing the decision to the fact that the overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet.

However, in April 2021, President Samia Suluhu Hassan insisted on expediting the project, and in the same month, Equinor and Shell urged the government of Tanzania to conclude negotiations on the project.

Eventually, in June 2022, the Ministry of Energy of Tanzania and TPDC signed a framework agreement with  Equinor and Shell to pave the way for the construction of the LNG export terminal.

During the signing ceremony, Minister Makamba said that the final investment decision is expected in 2025.

Tanzania Natural Gas

Tanzania has proven natural gas reserves of 57 trillion cubic feet, with at least 49.5 trillion cubic feet (Tcf) of those reserves far offshore in the Indian Ocean.