Government developers to resume talks over LNG project

Dar es Salaam. The government has revealed that once the General Election is completed, it will resume talks with the contracted international oil companies (IOCs) to conclude pending issues, especially the Host Government Agreement (HGA), for the planned $30 billion liquefied natural gas (LNG) in Lindi Region.

The negotiations were paused by the government authorities in August 2019 to allow a review of the country’s Production Sharing Agreement (PSA) framework.

The developers have already expressed ambitious target to begin project works after Norway’s Equinor (operator) recently stressed they were keen to resume halted talks with the government over the development of an LNG plant.

The multi-billion-dollar project is a collaboration between the Tanzania Petroleum Development Corporation (TPDC) and a consortium of Shell, Exxon Mobil, Equinor, and Ophir Energy.

“We look forward to resuming the negotiations, which are vital in ensuring appropriate commercial and legal foundations for a globally competitive LNG plant,” Norwegian firm- Equinor stressed recently.

In line with this, The Citizen understands that the government has already completed the PSA review, pending its approval by the Attorney General—representing significant progress towards concluding and signing of remaining legal and commercial frameworks including the Final Investment Decision (FID) which is likely to take some time to reach.

“The PSA review was handled by a special committee from the Controller and Auditor General’s office,” disclosed Fedister Agrey, LNG manager when she spoke to The Citizen.

She further asserted that the government was in final stages to secure a consultant who will lead the country in the pending negotiations and signing of the HGA with the LNG developers.

“We will then conduct several studies at the investment area including the Environmental Impact Assessment,” added Ms Agrey.

Disagreements over legal and commercial terms between two groups have stymied the project progress, however, it was reported in May last year that the project construction was planned to start in 2022 and conclude in 2028.

In 2014, TPDC conducted land valuation on approximately 2,071.705 hectares of land (5,119 acres) on the Indian Ocean coast which is the designated investment area for the LNG project.

The Land valuation was followed by land compensation whereby the national oil company (TPDC) in July paid a sum of Sh5.2 billion to over 400 Project-Affected Persons (PAPs) who have to evacuate land to pave way for the LNG project.

According to the available data, Tanzania’s overall recoverable gas reserves are estimated at more than 57tn ft³. These lie mainly in the country’s portion of the offshore Rovuma Basin, which it shares with southern neighbour Mozambique, where three LNG projects are already being developed utilising overall gas reserves estimated to be more than three times that size of Tanzania’s.

Meanwhile, UTT Asset Management and Investor Services Plc (UTT AMIS) is in talks with Lindi Municipal Council to acquire an investment area located nearby the planned LNG plant area.

According to UTT AMIS head of property management Eugenia Simon, the firm has allocated Sh3.2 billion for the land—a part of the money will be used for compensating over 300 PAPs.

“After acquiring the land, we will welcome other interested investors to establish investments at the potential area,” said Ms Simon when she spoke to The Citizen.

For his part, Lindi Municipal Council director Mr Jomaary Satura said another part of the money (Sh3.2 billion) will be used to supply water and electricity and improve road infrastructure at the area in order to attract investors.