Optimism ahead of LNG project negotiation resumption

Saturday October 23 2021
LNG PIC
By Rosemary Mirondo

Dar es Salaam. The government and an international oil and gas company have expressed optimism ahead of the liquefied natural gas (LNG) project talks which are scheduled to resume next month.

The discussions have stalled since 2017 following the government’s decision to review contracts with investors.

Energy Minister January Makamba posted on Twitter that he held a meeting with a team from Equinor ASA led by Mr Paul McCafferty, Senior Vice President for exploration and production.

“We both expressed optimism about the investability of the Tanzania LNG project,” he said.

According to him, the negotiations for the $30 billion LNG project were expected to start on November 8, this year.

When contacted for a comment about the planned negotiations, Equinor Vice President and Country Manager Unni Merethe Fjaer said the company was pleased with the government commitment towards the upcoming negotiations and the goal of realizing the LNG project in Tanzania.

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He said the Tanzania LNG investors have been engaging with the government of Tanzania and continues to be pleased about the partnership, cooperation and opportunities associated with the largest potential investment in the country’s history.

“We had a good meeting with the Energy Minister, Mr Makamba, an opportunity which we appreciate. We remain committed and as the minister has informed the date for the start of negotiations, the team from the investors for Blocks 1, 2 and 4, Equinor and Shell are ready to meet with the government team to progress the negotiations,” he said.

The Host Government Agreement (HGA) negotiations have been on and off, after they initially stopped in 2017 due to technicalities and resumed in 2018 only to stall again.

Initially in 2017, they stopped because the oil and gas companies could not agree on modalities together and therefore negotiations had to be stopped until it was agreed that they undertake it separately.

However, the talks resumed in April, 2018 but encountered a hitch after the Production Sharing Agreements (PSAs) were taken to the Attorney General for review.

Earlier, TPDC had been optimistic that the negotiations would be completed by September 2019 and they would move to another level known as the Preparation for Front End Engineering Design (pre-FEED).

They had explained that the HGA key terms negotiations were running on schedule and hoped to wrap up as planned and that the next stage would be the pre-FEED.

According to TPDC, the pre- FEED is actually the design of the project, including matters that would be involved in the construction of the LNG project.

The partners in the project include Shell Tanzania and its partners Ophir Energy and Pavilion Energy. Others are Equinor, Block 2 operator together with its partner ExxonMobil.

While Tanzania’s LNG project is being delayed, its southern neighbor, Mozambique, is progressing with development.

Total Oil reached a $20 billion Final Investment Decision in 2019 and was working out to deliver LNG in 2024.

With about 57.7tcf of natural gas reserves, Tanzania also offers endless opportunities for investors in the oil and natural gas sectors.