Tanzania has closed negotiations with an international energy consortium for a long-delayed $40 billion liquefied natural gas export project, paving the way for final agreements to be signed in the coming months weeks.
The consortium, led by Equinor, Shell and Exxon Mobil, wants to develop an onshore LNG plant in southern Tanzania near huge offshore gas fields, but talks on the project had stalled for more than a year before resuming in 2021, when President Samia Suluhu Hassan. took over.
Shell vice president and president of Tanzania Jared Kuehl said they “have concluded important negotiations with the government of Tanzania.” In a statement posted on Linkedin., Kuehl added that the main agreements, the so-called Host Government Agreement (HGA) and a Production Sharing Agreement (PSA), could be signed “in the coming weeks”.
Charles Sangweni, the Tanzanian government’s chief negotiator at the LNG talks, said HGA’s proposal will need to be approved by Tanzania’s cabinet and parliament before it takes effect, and the project’s full investment could reach 42 billion dollars.
“It is my wish that the HGA can be signed in a month or two,” Sangweni said in an interview.
The agreements reached after 18 months of talks include a maritime lease, land lease and security, while the Tanzanian army will handle security for the project, Sangweni said.
The other partners in the consortium are Indonesia’s MedcoEnergi and Pavilion Energy, along with Tanzania’s national oil company TPDC.
The LNG project could make Tanzania a major player in the gas market as the West seeks to reduce dependence on Russian energy following Russian President Vladimir Putin’s invasion of Ukraine. The urgency has given a new impetus to Hassan’s push to move the project forward.
With recoverable natural gas reserves estimated at more than 57 trillion cubic feet, Tanzania, along with neighboring Mozambique, could emerge as Africa’s new LNG hub, analysts say.
