CONSTRUCTION works on a $30bn liquefied natural gas (LNG) project in Tanzania is set to begin in 2023. According to Energy Minister Medard Kalemani, the scheduled date follows the resumption of talks with companies including Equinor ASA. Construction is expected to take about five years.
The LNG project has been under consideration since 2014. It however stalled for more than a year under the administration of the former President, the late John Pombe Magufuli who prioritised the East Africa Crude Oil Pipeline project.
Resumption of negotiations
President Suluhu then took charge and directed her administration to fast-track delayed investments on the project. She ordered the resumption of negotiations with the companies in May, about four months after Equinor’s decision to take a $982 million impairment on the project following failure to settle fiscal and commercial terms with Tanzania.
‘We expect to conclude negotiations for a number of government agreements and review production sharing agreements by June next year. Compensation process has been finalised to pave way for the project,’ said Kalemani.
The project will involve gas from Shell-operated blocks 1 and 4 and Equinor’s Block 2 being piped from deep-water subsea wells to two or three liquefaction trains at Lindi. These blocks house about 35 trillion cubic feet of recoverable gas, split evenly between the two operators’ assets.
‘Meanwhile, discussions are ongoing on another LNG plant which will involve the construction of a two- train onshore that will export gas from the country. Other project partners include Royal Dutch Shell Plc, Exxon Mobil Corp., Sophi Energy Ltd. and Pavilion Energy Pte Ltd. A pipeline network to connect and distribute gas to more than 10,000 homes and factories, in the Dar es Salaam is also being developed by the government,’ said Kalemani.