Tanzania Liquefied Natural Gas Project (TLNGP)
The Tanzania Liquefied Natural Gas Project (TLNGP), also known as the Likong’o-Mchinga Liquefied Natural Gas Project (LMLNGP), or the Tanzania LNG Project, 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.
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.
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 Equinor, Shell, ExxonMobil, Pavilion Energy, and Ophir Energy.
However, in 2019 Tanzania suspended talks with the foreign investors to pave the way for a review of the country’s gas production sharing agreement (PSA) regime ordered by the late President John Magufuli.
The PSA was signed in 2007 by the Norwegian energy company Equinor with TPDC.
According to the agreement, Equinor is the operator with a 65% participating interest, along with ExxonMobil’s working interest of 35%.
TPDC has the right to participate with a 10% interest. Equinor made nine gas discoveries in Block 2 offshore Tanzania with estimated volumes of 20 Tcf of gas in place.
However, 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.
The company explained that while progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet.
Nonetheless, Equinor continues to engage with the Government of Tanzania in negotiations on a commercial, fiscal and legal framework that may provide a viable business case for TLNG in the future.
In April 2021, President Samia Suluhu Hassan commented on the LNG project during the swearing-in of the permanent secretaries, stressing the need to expedite the project.
In the same month, Equinor and Shell urged the government of Tanzania to conclude negotiations on the LNG project. The two companies had previously signed a Memorandum of Understanding (MoU) in January 2021 for collaboration on the LNG project.
Meanwhile, in May 2020 TPDC, the company responsible for the acquisition of the LNG site commenced the compensation process for the affected communities at the LNG site consistent with Tanzanian laws.
And in November 2021, Tanzania’s President Samia Suluhu Hassan resumed negotiations with investors for the development of the LNG Project.
In January 2022, TPDC hired UK law firm Baker Botts as the new Transaction Adviser to the Government Negotiation Team and TPDC in the LNG Project.
And 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, Tanzania’s Energy Minister January Makamba said that the final investment decision is expected in 2025.
Last Updated: 16th June 2022