Nairobi – Tanzania’s government has resumed negotiations with energy companies over construction of an estimated US$30 billion liquefied natural gas (LNG) project, Energy Minister January Makamba said this week.
Norway’s Equinor, one of the companies that has a stake in the project, last week said that talks with Tanzanian authorities were expected to focus on conditions that would enable companies to invest.
“For the past two months, we’ve worked hard behind the scenes to get here. We’re confident that a final investment decision will come sooner than is traditionally the case,” Minister Makamba said on Twitter.
The Norwegian company said it was too early to give any timeline for the decision process.
“There is much more work to do, but we are pleased to be engaging and framing the commercial, fiscal, regulatory and legal priorities,” an Equinor spokesperson said in an email.
A US$30 billion price tag had been communicated by the companies some years ago, but Equinor does not yet have a revised estimate, the spokesperson added.
Equinor operates Tanzania’s Block 2, in which ExxonMobil also holds a stake and which is estimated to hold more than 20 trillion cubic feet (0.6 trillion cubic metres) of gas.
Equinor aims to work on the LNG project with Shell, which operates Block 1 and Block 4 off Tanzania, with 16 trillion cubic feet in estimated recoverable gas.
Shell declined to comment on Minister Makamba’s statement.
The Anglo-Dutch company last week said its chief executive had been in talks with Tanzanian President Samia Suluhu Hassan about potential investments in energy projects.
Last week, Equinor said it could start producing LNG in Tanzania by the end of this decade.
The energy company made a series of gas discoveries in Tanzania’s waters during the last decade and recently said it will revive previously stalled talks on the possible development of those reserves.
“We are cautiously optimistic and pleased by what they (Tanzania’s government) say,” Al Cook, Equinor’s head of international operations, told Reuters. “If we are successful, we believe we could start this (LNG production) up by the end of the decade. That would be the target that we would go for.”
Equinor in January wrote off the entire book value of US$982 million of its portfolio in Tanzania, citing poor economics. But global LNG prices have since surged to record highs driven by strong Asian demand, making the project more attractive.
“We see rising demand for LNG from Asia as a clean alternative for coal. China during the course of (the) Covid (pandemic) added as much gas demand as the entire nation of France,” Cook said. – Reuters