Tanzania plans huge LNG project

The East African country is due to launch commercial use of its vast offshore gas deposits

The Tanzanian authorities have completed negotiations with British energy major Shell and Norway’s Equinor over the construction of a terminal for exporting liquefied natural gas (LNG), tapping the country’s huge offshore resources.

The estimated investment in the facility is valued at $30 billion and the sides are moving towards drafting contracts, the African country’s Energy Ministry said on Twitter on Tuesday.

One of the deals will cover the development of offshore fields operated by Shell that would provide gas for the LNG project, Tanzanian Energy Minister January Makamba said.

Shell became the operator of two offshore blocks in Tanzania with its partners Medco Energi (Ophir Energy) and Pavilion Energy. The deposits hold a total of 16 trillion cubic feet (Tcf) of proven natural gas reserves.

Meanwhile, Equinor has discovered nine gas deposits in Tanzania since 2011 containing more than 20 Tcf and is now conducting exploration and drilling work.

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So far, regulatory obstacles have hampered the launch of large-scale LNG production in Tanzania, but the latest progress in negotiations could speed up plans to monetize the huge offshore gas reserves in the late 2020s or early 2030s.

Tanzania’s government is expecting to reach a final investment decision for the LNG terminal in 2025.

Equinor and Shell, along with Exxon Mobil, Ophir Energy, and Pavilion Energy, plan to build the LNG plant in Tanzania’s southeast Lindi region.

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