Tanzania is pushing to finalize a $42 billion liquefied natural gas (LNG) agreement with major energy partners including Shell and Equinor by the end of 2025. The project, long delayed by financial and regulatory disagreements, is now in its final negotiation stages. Additionally, delays on the deal have also been driven by disagreements over the Host Government Agreement (HGA), fiscal terms and government incentives. These issues have been under discussion for several years.
The LNG facility will be located in Likong’o, in Southern Tanzania’s Lindi. Once fully operational, Shell and Equinor, among others, will be working with planned estimated production capacity of up to 10 million tons of LNG annually.
Other energy companies in the push for Tanzania’s $42 bn LNG deal include ExxonMobil, Pavilion Energy, Medco Energi, and Tanzania’s Petroleum Development Corporation (TPDC). These companies continue to push for the deal expected to support them with approximately 57 trillion cubic feet of natural gas across various fields. The fields span areas like Songo Songo, Mnazi Bay, and Kiliwani North.
Impact of Tanzania’s LNG Deal
Expected outcomes from the $42 billion LNG deal between Tanzania and several energy majors including Shell and Equinor is large in scale beyond export earnings. The project has the potential to reshape the East African country’s economic geography. Additionally, the southern regions of Lindi and Mtwara, which have been historically underserved despite natural resource wealth, may receive major boosts from job creation, infrastructure investment including the Standard Gauge Railway expansions, and foreseen industrial growth.
As much hinges on the project, FID on the $42 billion LNG plant in Tanzania is expected by either late 2025 or early 2026, assuming the remaining negotiations on tax, legal matters, contract structure, among others are resolved. This wave of expectation also comes as the Tanzania-Uganda Gas Pipeline project appoints a consultant for its feasibility study. The project is expected to reshape gas supply East Africa.
Timeline of the $42bn Tanzania LNG Plant Project
2014-2022
2014-2015: Conceptual planning, field discoveries, preliminary assessments
2022: Tanzania signs framework agreement with Equinor and Shell
2023
As of March 2023, negotiations are complete for some components. Contract preparations and definition of HGA are under way
2025
February 2025: Tanzania’s Energy Minister expresses hope to complete negotiations by June 2025
Mid 2025: Reports that the HGA may be finalized imminently
Mid-Late 2025: Negotiation of fiscal, legal, contract terms still ongoing. Investor interest also remains active
Late 2025-Early 2026
Expected finalization of HGA and Production Sharing Agreement (PSA)
Final Investment Decision (FID) to be taken once contractual framework is in place
Construction to begin after FID
Key Agreement on Tanzania’s $42 Billion LNG Plant in Sight
Reported July 24, 2025 – A long-awaited deal to set out the terms of Tanzania’s $42 billion LNG plant is expected to be finalized in two weeks. Finalization of the Host Government Agreement (HGA) between Tanzania and international partners will pave the way for the project. Once done, this will commence the next implementation levels to continue. The HGA will establish the essential legal and fiscal framework required to reach the final investment decision. This is a vital milestone expected to accelerate the project’s development and bolster energy security. It will also facilitate economic growth in the region.
“We are optimistic that if not this week, then by the end of the month,” a source close to the topic noted. The source, preferring not to be mentioned, noted that so far the two parties have agreed on most part. Deputy Prime Minister and Minister of Energy, Doto Biteko, also confirmed the negotiations near completion. However, he declined to mention the exact time-frame in the interest of the negotiations.
Also read: Tanzania Liquefied Natural Gas Project (TLNGP)
Scope of Implementation on Tanzania’s LNG Plant
The implementation of Tanzania’s LNG plant awaits the conclusion of negotiations to take a full swing towards commencement. The conclusion of negotiations will be marked by finalized documents being submitted to relevant authorities for approval. The project timeline aims for HGA completion to enable preparatory engineering phase. Moreover, this is before the FID in 2025, leading to production commencement. The LNG project is set to be implemented in the Likong’o area of Lindi Region.
President Hassan has noted the strategic importance for the LNG venture. She emphasized its potential to bring significant capital and revenue to Tanzania. She also noted it would ensure benefits prioritize residents of the Lindi and Mtwara regions. The president has also advocated for empowering Tanzanians to participate fully in the project. The nation possesses substantial natural gas reserves, estimated at 57 trillion cubic feet. The reserves are primarily located offshore in the Indian Ocean. Furthermore, significant discoveries have also been made at Songo Island and Mnazi Bay.
Also read:
Tanzania’s Natural Gas Export Expansion to Neighboring Countries
