Africa Oil & Gas: Agreement on Tanzanian LNG project probably by 2018

Image courtesy of BG Group (Now part of Shell)

An agreement between the Tanzanian government and the international majors looking to build a US$30 billion LNG export project, could be reached in 2018. 

Talks on the host government agreement began in September 2016 and the negotiations are expected to last a year and a half, Kapuulya Musomba, the acting managing director of Tanzania Petroleum Development Corporation (TPDC), told Reuters.

Tanzania Petroleum Development Corporation is partnering Statoil, ExxonMobil, Ophir and Shell on the development of the project that will enable Tanzania to export its offshore gas reserves.

The total recoverable natural gas reserves are estimated at over 55 trillion cubic feet.

The final investment decision on the project has been delayed by the government as it is ironing out the issues with the land acquisition for the site where the onshore facility should be located as well as with the legal framework for the industry.

The host government agreement is necessary to determine the terms on which the project partners will build and run the project, and the FID depends on the outcome of the discussions.

In addition, it is expected for the project partners to seek regulatory and commercial stability before making the final investment decision.

In November last year, Oystein Michelsen, Statoil’s Tanzania country manager said that the FID on the project will not be made within the next five years. The project’s construction is expected to last for another five years after the FID.

John Magufuli, Tanzania’s president in August called on the state officials to expedite the development of the project with the government acquiring more than 2,000 hectares of land for the construction of the two-train LNG facility.

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