Tanzania has signed a framework agreement with Equinor of Norway and Shell of the United Kingdom, bringing them one step closer to starting construction on a $30 billion project to export liquefied natural gas (LNG).
The agreement announced over the weekend calls for a final investment decision by 2025 and the start of operations at a liquefied natural gas plant to be built in Tanzania’s southern coastal town of Lindi by 2029-2030.
It is a significant step forward in Tanzania’s efforts to begin exporting a portion of the vast gas deposits off its coast, which are estimated to be worth more than 57 trillion cubic feet.
“We have never reached this stage of natural gas development in the history of our country,” Energy Minister January Makamba said during the signing ceremony in the capital Dodoma.
“This project will significantly change our economy,” Makamba said.
“Tanzania’s geographical positioning makes it easy to transport the natural gas to other countries, especially Asian (ones), which are looking for new sources of energy.”
Tanzania’s President Samia Suluhu Hassan, also present, welcomed the preliminary agreement.
“We have reached a good stage of discussions about the LNG project, but much work is still waiting for us to talk and make it competitive,” she said.
Plans for the LNG plant had been dormant for several years under her predecessor, John Magufuli, and she re-launched them after taking office last year.
Unni Fjaer, Equinor’s Tanzania country manager, stated that the agreement has been in the works for a long time.
“We had many stops but through [the] resolve of the government, we kept engaging, discussions and we believe Tanzanian gas presents a huge opportunity,” she said.
Equinor, in collaboration with ExxonMobil, is exploring a block 100 kilometres (60 miles) off the coast of Lindi, where it claims to have discovered 20 trillion cubic feet (566 billion cubic metres) of natural gas.
Shell, Ophir Energy, and Pavilion Energy claim to have discovered 16 trillion cubic feet (453 billion cubic metres) of gas in two additional offshore blocks in the same area.
During the coronavirus pandemic, travel restrictions harmed Tanzania’s tourism industry, which is a major source of revenue in the East African country.