Liquefied Natural Gas (LNG)

Government of Tanzania completes negotiations with Equinor and Shell on Tanzania LNG

The Government of Tanzania completed negotiations with Shell and Equinor in March 2023. Picture: Ministry of Energy (Nishati).

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The Government of Tanzania has completed negotiations with Shell and Equinor, Minister of Energy January Makamba said yesterday.

The completion of the negotiations enables the writing and signing of key contracts towards the $30bn Tanzania LNG project, including the Host Government Agreement (HGA).

The project is expected to monetise 16 Tcf of gas discovered by Shell on Block 1 and Block 4, and 20 Tcf of gas discovered by Equinor on Block 2. Partners on the licenses include ExxonMobil, Ophir Energy, and Pavilion Energy.

In June 2022, a Framework Agreement was signed between the Government of Tanzania signed, Equinor, and Shell to support negotiations. The HGA was then expected to be signed by the end of 2022 for a taking of the final investment decision (FID) in 2025.

Equinor has scheduled a 3-year planning and engineering programme for the pre-FEED and FEED and expects construction to take at least 4 years after that.

An independent macroeconomic study prepared last year by Stanbic Bank Tanzania and endorsed by the Ministry of Energy found that the $32.7bn, 15 million tonnes per annum (MTPA) terminal could generate fiscal proceeds of up to $6bn a year for Tanzania.

Tanzania LNG is also expected to be a pathfinder in the development of sustainable LNG infrastructure in Africa with the partners reportedly exploring several low-carbon electrification options such as hydropower and solar, along with carbon capture utilization and storage (CCUS) technologies.

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