Page 9 - DMEA Week 05 2021

DMEA LNG DMEA

Equinor takes $982mn write-

down at TLNG

TANZANIA NORWAY’S Equinor has taken a $982mn write- a year-long delay.
down charge at its long-delayed Tanzania LNG Equinor’s journey in Tanzania began in 2007,
Talks will continue, (TLNG) project after judging it to be uncompet- when it signed a production-sharing agreement
but the company says itive, the company reported on January 29. (PSA) to develop the offshore Block 2. It began
existing terms mean Equinor has been trying to get TLNG off drilling in 2011 and to date has made nine gas
that the project is the ground for years, but has been unable to discoveries containing 20 trillion cubic feet
unfeasible. do because of regulatory delays and difficulties (566bn cubic metres) of gas. The company wants
agreeing investment terms with the Tanzanian to use this resource to underpin a 7.5mn tonne
government. per year (tpy) LNG export terminal.
“While progress has been made in recent Equinor operates the project with a 65%
years on the commercial framework for TLNG, position. ExxonMobil, its partner, holds the
overall project economies have not yet improved remaining interest but is yet to book a write-
sufficiently to justify keeping it on the balance down charge.
sheet,” Equinor explained. “The TLNG project The TLNG finds are situated 100 km offshore
has an anticipated breakeven price well above the in waters 2,500 metres deep. Equinor has com-
portfolio average for Equinor and is, at this time, plained in the past of “large underwater canyons”
not competitive within this portfolio.” that make offshore work challenging. The plan is
The write-down will be counted in Equinor’s to run a subsea pipeline from the discoveries to
fourth-quarter results. The company said it onshore facilities north of Lindi. The bulk of the
would continue negotiations with Tanzania, gas would be liquefied and exported, but 10%
holding out hope that commercial, fiscal and would also be supplied to the domestic market.
legal terms can be worked out that would make Equinor’s investments in Tanzania have
the project viable. Tanzania’s The Citizen news- exceeded $2bn. The company revealed in its
paper reported in December that talks between 2019 annual report that its licence for the area
Equinor and the government had resumed after had expired, but talks continued. ™

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