Tanzania to sign $42 billion deal for onshore LNG plant in July

David Herbling and Fumbuka Ng'wanakilala, Bloomberg June 23, 2023

(Bloomberg) – Long-delayed negotiations between Tanzania and oil majors for a $42 billion onshore liquefied natural gas (LNG) plant were concluded in May, paving the way for agreements to be signed in July.

The East African nation could confirm a host government agreement and an amended production-sharing deal with the project’s consortium that includes Equinor ASA, Shell Plc and ExxonMobil Corp. as early as next month, according to the Energy Ministry’s permanent secretary, Felchesmi Mramba. It also aims to pass a project law to expedite construction of the plant.

“We want to have a special law for that project,” he said on the sidelines of an energy conference in the Kenyan capital, Nairobi. “That should pave way for the final investment decision. The earlier we accomplish these two, the earlier the foreign direct investment comes.”

Tanzania now expects its first LNG export within five years after construction of the facility, he said.

If successful, it will likely become the second country to export gas off the eastern African shoreline. Neighboring Mozambique flagged off its first shipments from a floating LNG terminal in November.

About 10% of the gas to be produced from the proposed LNG terminal, around 250 MMscfd will be used domestically to fuel industries, Mramba said. Tanzania estimates it has recoverable natural gas reserves of more than 57 trillion cubic feet.

The government is keen to accelerate development of its natural resources and plans to conduct joint oil and gas exploration with China’s Cnooc Ltd. in two offshore blocks held by the state-owned Tanzania Petroleum Development Corp. The work on deep-sea blocks 4/1B and 4/1C will be near large gas fields, according to Energy Minister January Makamba.

The search for hydrocarbons on the continent has grown steadily since a slump in 2020, as European nations seek to diversify their energy supplies and cut reliance on Russian gas.

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