The government of Tanzania has signed a framework agreement with Equinor and Shell for a $30 billion LNG project, bringing the two companies closer to starting construction. State television is broadcasting the signing live. In the next few months, the parties will begin front-end engineering and design. The project will be located in Lindi, Tanzania, and will be connected to the country’s huge deepwater gas discoveries off the southern coast. It is expected to have a 30-year life.
The agreement will expedite the construction of a $30 billion LNG export terminal in Tanzania, near large offshore natural gas discoveries. A final investment decision is expected by 2025. The proposed LNG export terminal will be the first step towards Tanzania’s ambition of commercializing its vast reserves of natural gas. Tanzania has estimated reserves of 57 trillion cubic feet of gas, which it plans to use for energy production.
Shell operates Block 1 and Block 4 offshore and has discovered 16 Tcf (453 Bcm) of recoverable natural gas. In the offshore block, it holds a 60% stake in the Tanzanian government PSA. The government’s other two major investors are Pavilion Energy, a subsidiary of Singapore’s Temasek Group and focused on LNG trade in Asia and Europe. Finally, there is Medco Energy, a Jakarta-based company with interests in Indonesia, Tanzania, and Mexico.
With the approval of the new framework agreement, Tanzania is well on its way to boosting its economy and well-being. The company’s investment of 70 trillion shillings is a tremendous boost for the country’s economy and the nation’s future. The new LNG project will increase Tanzania’s energy independence and reduce import dependence on imported oil. Ghana and Nigeria also have similar deals, but they are not yet ready to move forward with the projects.