Tanzania Completes Negotiations With Shell and Equinor on LNG Project

Negotiations for the construction of a $30 billion liquefied natural gas (LNG) terminal between Tanzania, Norway's Equinor (EQNR.OL) and Britain's Shell (SHEL.L) are complete and contract preparations are underway, Tanzania's energy ministry said.

The development of Tanzania's vast offshore gas resources has been held up for years due to regulatory delays.

Last June, all three parties involved signed a framework agreement aimed at bringing closer the start of the project's construction. The government aims to reach a final investment decision in 2025 for the facility.

"Minister January Makamba said negotiations on the construction of the LNG project were complete, and now experts are at work drafting contracts," the energy ministry said on its Twitter account late Monday.

"Of these contracts, one is about the Host Government Agreement and another is on joining blocks 1, 2 and 4, which will provide natural gas for the LNG project," it said without giving a timeline for when the contracts will be signed.

Shell operates Tanzania's Block 1 and Block 4, which hold 16 trillion cubic feet in estimated recoverable gas.

Norwegian oil and gas producer Equinor also operates Block 2, in which ExxonMobil (XOM.N) holds a stake and which is estimated to hold more than 20 trillion cubic feet of gas.

Equinor and Shell, along with Exxon Mobil, Ophir Energy and Pavilion Energy, plan to build the LNG plant in Tanzania's south east Lindi region.

Tanzania already uses some of its natural gas discoveries for power generation and to run manufacturing plants. It also plans to build a fertiliser plant.

The government has put the country's total estimated recoverable gas at 57.54 trillion cubic feet, as of June 2022.

Reporting by Nuzulack Dausen; Writing by George Obulutsa; Editing by Sherry Jacob-Phillips