Page 7 - DMEA Week 07 2021

DMEA COMMENTARY DMEA

Source: Equinor

metres) of in-place gas. It has hopes of using this Tanzania’s government in the hope that com-
resource to underpin a 7.5mn tonne per year mercial, fiscal and legal terms can be worked out
LNG export terminal. The company has a 65% that would make the project viable. Tanzania has
interest in the project, while ExxonMobil has said in the past it expects TLNG to start up some-
35%. time in the late 2020s, but the project faces con-
The project poses some operational chal- siderable competition from a number of other
lenges. The discoveries are situated 100 km suppliers expected to bring more capacity online
offshore in waters 2,500 metres deep. Equinor in the next decade, including in Africa.
has complained before about “large underwater Neighbouring Mozambique has several pro-
canyons” that make offshore activity challeng- jects in the pipeline. First and foremost there is
ing. The envisaged plan is to connect the discov- the Total-led Mozambique LNG, due to start up
eries via pipeline with onshore facilities north of in 2024 and ramp up to a full capacity of 13mn
Lindi. About 90% of the gas would be liquefied tonnes per year (tpy). Eni’s 3.4mn tpy Coral
and exported, while the remainder would be FLNG is on track for first gas in 2022, and there
delivered to the domestic market. is also ExxonMobil’s unsanctioned 15.2mn tpy
Equinor has already invested considerable Rovuma LNG project to consider.
amounts in Tanzania – more than $2bn by its All told, there is around 26mn tpy of LNG
latest estimate. But it has not been able to get the capacity in Sub-Saharan Africa that has been
LNG project off the ground, amid years of reg- sanctioned and is under development, adding
ulatory delays and wrangling with the govern- to 33.8mn tpy of existing supply spread across
ment over investment terms. Angola, Cameroon, Equatorial Guinea and
Nigeria, according to a recent report by the
A crowded market African Coalition for Trade and Investment in
Negotiations over TLNG were halted by the gov- Natural Gas (ACTING). Besides Total and Eni’s
ernment in mid-2019, to allow a review of Tan- projects in Mozambique, other approved ven-
zania’s PSA regime. The outcome of this review tures include the Nigeria LNG’s seventh train
is yet to be announced. Equinor’s licence for the and BP’s floating LNG scheme in Mauritania/
TLNG discoveries has already expired but is Senegal.
expected to be renewed. ACTING estimates that Rovuma LNG and
Casting greater doubt on the project, con- other unsanctioned projects in the region could
ditions on the global gas market have altered yield a further 74mn tpy of LNG supply. And
greatly over the past year. Whatever Equinor’s outside of Africa, there is also rising supply in
target was for lowering the project’s breakeven the US, Russia and Qatar to consider. The latter
cost to make it feasible before the pandemic will just took a final investment decision (FID) on a
now have been altered significantly. The com- 23mn tpy expansion project at the North Field,
pany has estimated TLNG’s cost before at $20bn. which is sure to make other suppliers more hes-
Equinor has said it will continue talks with itant about signing off on new investments. ™

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