Page 6 - DMEA Week 07 2021

DMEA COMMENTARY DMEA

Tanzanian LNG hopes dashed

after Equinor writedown

The LNG market will grow increasingly crowded in the coming years, and a
significant share of the extra supply will come from Africa

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

P6 www. NEWSBASE .com Week 07 18•February•2021