The proposed US $30bn Tanzania liquefied natural gas (LNG) project is a proposed gas project that has been in the cards since 2013 that involves the construction of an LNG plant at Lindi in Tanzania. According to Equinor an oil exploration company in Tanzania, the project is expected to generate significant long-term benefits to Tanzania through government revenues, gas for energy production, employment and development of the local economy.
The company says that the Project will be the first of its kind in Tanzania both in magnitude and size and could significantly contribute to the growth of the Tanzanian economy. Below is the project’s timeline and all you need to know:
Equinor announced major gas discoveries in offshore Tanzania and positioned the country as a potential large gas producer in East Africa. The company said that together with partner ExxonMobil in Block 2 they have discovered estimated volumes of more than 20 trillion cubic feet (Tcf) of gas in place.
It further pointed out that an LNG project is the viable solution to secure the development of the gas resources and maximize the value of the project for the government and for the companies responsible for the exploration and the development activities.
The company said that following the success of its exploration campaigns and as the operator of Block 2, it is preparing for the development of the gas resources which are
located about 100km from the coast of Lindi, at a water depth of 2500 meters. Therefore, a site was identified in the Lindi region to host the onshore LNG plant once the final investment decision is made by the investors. TPDC is the licence holder for the offshore Block 2 and the land title holder for the selected LNG site.
It added that the gas in Block 2 is spread across several reservoirs in locations situated
kilometres apart. This will require multiple production wells to extract the gas and bring it to shore.
The company said that it had conducted extensive technical studies on Block 2 that have shown that the seabed conditions are challenging with large underwater canyons. Therefore they concluded that they can safely and most efficiently develop the fields by using subsea wells (wells located at the seabed), without costly installations above sea level.
The gas will then be transported by a subsea pipeline to shore. Once the gas reaches shore on the common LNG site, north of Lindi, it will be processed and cooled down to form liquefied natural gas, LNG.
The company further noted that to be able to develop the large gas discoveries in Block 2, that require significant capital investments by international investors, it is necessary to secure access to well established international LNG markets. Tanzania is strategically located to serve the markets in Asia, Europe and South America.
It said that the Block 2 LNG production, expected to be 7.5 million tons per year (MTPA), will be exported to the international markets using dedicated LNG ships, which will constitute the main source of revenues. A part of the gas arriving in Lindi will be allocated to the domestic market and in the future potentially exported to regional markets.
Talks on a host government agreement and other terms for the US $30bn Tanzania LNG project commenced.
The talks were were suspended by the Tanzanian government towards the end of the year to pave the way for a review of the country’s production sharing agreement (PSA) regime ordered by then President John Magufuli. The president called for called for the review of PSA clauses related to repatriation of funds, arbitration issues, revenue sharing and parliamentary power.
In January, Equinor decided to write down the book value of its the LNG project on the company’s balance sheet by US $982m. The company stated that while progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet.
However, after the untimely death of President Magufuli in March, His successor, Samia Suluhu Hassan, said during the swearing-in ceremony of the country’s permanent secretaries that there was a need to progress the LNG project. She added that she had directed the Ministry of Energy to accelerate talks with the project’s stakeholders, Shell and Equinor.
In early June, Energy Minister Medard Kalemani announced that construction works on the US $30bn Tanzania LNG project is set to begin in 2023. Construction is expected to take about five years.
“We expect to conclude negotiations for a number government agreement and review production sharing agreements by June next year. Compensation process have been finalized to pave way for the project,” said Kalemani.