Page 8 - GLNG Week 07 2021

GLNG COMMENTARY GLNG

Tanzanian LNG hopes dashed

after Equinor write-down

The LNG market will grow increasingly crowded in the coming years,

and a significant share of the extra supply will come from Africa

PERFORMANCE FOR many years, the East African nation of Tan- But although several discoveries have been made
zania has been striving to establish its own LNG by international majors since then, none have
WHAT: exports, but commercial realities have under- been exploited.
Equinor recently booked mined this ambition. This is partly because of difficult geological
a $982mn write-down at Further dashing hopes, Norwegian state oil and environmental conditions on the country’s
its Tanzania LNG project. firm Equinor revealed in late January it had writ- shelf. However, development has also been sty-
ten $982mn of value off its books in connection mied by a standoff between mainland Tanzania
WHY: with its long-delayed Tanzania LNG (TLNG) and the island of Zanzibar, which has been seek-
The company says the project. The development, it concluded, is not ing greater legislative and regulatory autonomy
venture is not competitive “competitive.” from the federal government in Dodoma.
against its other “While progress has been made in recent Equinor entered Tanzania in 2007, when it
investments. years on the commercial framework for TLNG, signed a production-sharing agreement (PSA)
overall project economics have not yet improved to explore the offshore Block 2. It started drilling
WHAT NEXT: sufficiently to justify keeping it on the balance there in 2011 and has so far made nine discover-
Talks will continue, but sheet,” Equinor explained. “The TLNG project ies containing 20 trillion cubic feet (566bn cubic
TLNG faces competition has an anticipated breakeven price well above metres) of in-place gas. It has hopes of using this
from other African LNG the portfolio average for Equinor and is, at this resource to underpin a 7.5mn tonne per year
supply. time, not competitive within this portfolio.” (tpy) LNG export terminal. The company has
a 65% interest in the project, while ExxonMobil
Limited progress has 35%.
The first geological surveys were carried out in The project poses some operational chal-
Tanzania’s offshore zone back in the early 1950s. lenges. The discoveries are situated 100 km

P8 www. NEWSBASE .com Week 07 19•February•2021