Tanzania to seal its US$30b LNG project in November 2021

TANZANIA – The government of Tanzania is looking to seal a US$30 billion liquefied natural gas (LNG) project within six months, after President Samia Suluhu called for a resumption of negotiations that had stalled for more than a year.

One of the developers, Equinor ASA, took a US$982 million impairment on the project in January 2021, which it said would be reversible, after failing to settle terms with Tanzania’s government.

Other project partners include Royal Dutch Shell Plc., Exxon Mobil Corp., Ophir Energy Ltd. and Pavilion Energy Pte.

This will be in partnership with the state-run Tanzania Petroleum Development Corporation (TPDC).

In 2019, Tanzania’s Liquefied Natural Gas (LNG) project was put on hold after the suspension of talks between the government and foreign investors who were seeking to review the sharing agreements.

The discussions were suspended due to concerns of massive tax evasion, unfair contracts, and manipulation by companies to decrease payments to the government.

“Construction of this project is expected to start in 2022 and will be concluded in 2028. The project will have capacity to produce 10 million tonnes of LNG a year”

The US$30 billion is projected to add another 2% points to the annual economic growth of around 7%.

The project will also have the capacity to produce 10 million tons of liquefied natural gas every year and will thus add 10% gas to Tanzania’s domestic use. 

Construction of the project is set to start in 2022.

In June 2019, Medard Kalemani, Tanzania’s energy minister, said in a budget presentation to parliament that: “Construction of this project is expected to start in 2022 and will be concluded in 2028. The project will have capacity to produce 10 million tonnes of LNG a year.”

Tanzania’s Central bank has said that just starting work on the plant would add another two percentage points to annual economic growth of around 7%.

The government is presently holding individual talks with the oil companies to agree a “host government agreement”.

Kalemani added that construction of a US$1.9 billion fertilizer plant would also start in 2021 and would be operational in 2024.

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