Equinor, Shell, and Exxon Mobil have reached an agreement with the Tanzanian government to build a massive LNG export terminal in the East African country.
The accord is seen as a significant step forward in the long-delayed effort to tap Tanzania’s massive but remote offshore gas resources.
The energy companies involved in the negotiations anticipate that the project will cost tens of billions of dollars.
The arrangement, according to Equinor, involves primarily of a production-sharing agreement and a regulatory framework provision by the host government.
However, according to Equinor, the transaction is subject to legal scrutiny and quality assurance.
The parties concerned are anticipated to finalize a final agreement in the following weeks.
“We look forward to continuing the journey with Tanzania in the coming years to achieve the series of milestones required to move this project towards a final investment decision,” Equinor said.
“The signing of the agreements will be an important milestone, and the Tanzanian Government deserves credit for the hard work, collaboration, and determination it has shown throughout this process,” the business noted.
According to Tanzania’s senior negotiator, Charles Sangweni, the deal also covers land usage and security.
“We are happy it is a big step towards the project’s implementation,” Sangweni told Reuters, adding that “we still have a lot to do.” If everything goes as planned, I believe the final investment decision will be made in 2025.”
Unni Fjaer, Equnior’s Tanzania national manager, stated on LinkedIn: “The work does not stop with the upcoming agreements being signed.”
“After we iron our suits and refill our coffee cups (or tea! ), we’ll be on the road again to meet our Tanzanian government counterparts to advance our joint journey to the next milestones.”
In a LinkedIn post, Shell vice-president for Tanzania and country chair Jared Kuehl stated, “Important negotiations with the government of Tanzania have concluded.” We anticipate signing an HGA covering the onshore portions of the project and a PSA overseeing its upstream component in the next weeks, subject to the successful completion of the assurance process.”
In Block 2 off the coast of Tanzania, Equinor and Shell discovered more than 20 trillion cubic feet of gas.
Shell also operates Blocks 1 and 4 in Tanzania. The estimated recoverable gas reserves in these blocks amount 16 trillion cubic feet.
The projected LNG export facility in the country’s south-east Lindi region is expected to have a capacity of at least 10 million tonnes per year.