Page 4 - AfrOil Week 24 2022

AfrOil COMMENTARY AfrOil

Initial HGA signing ceremony on June 11 (Photo: Twitter/@SuluhuSamia)

Tanzania LNG’s potential pitfalls

The initial HGA is a triumph for Tanzania’s president, who has been working hard to revive

the stalled $30bn project, but the timelines under discussion may be overly ambitious

SINCE she assumed office in March of last year, additional negotiations toward a final HGA and
Tanzania’s President Samia Suluhu Hassan has the other agreements needed to secure a final
WHAT: said repeatedly that she views the oft-delayed investment decision (FID) on the scheme.
Tanzania’s government Tanzania LNG scheme as one of her highest Suluhu said after the signing ceremony
has signed an initial host economic priorities. that she expected Tanzania LNG to benefit the
government agreement In doing so, she has set herself apart from her country in many ways. This project is “very
(HGA) with Equinor and predecessor John Magufuli, who devoted much unique, as it brings both capital and revenue,”
Shell. more of his attention to the East African Crude she remarked. “Therefore, when completed, the
Oil Pipeline (EACOP), the midstream compo- project will change the country’s economic out-
WHY: nent of the Lake Albert Development Project look and unlock the economic growth and cap-
The document supposed- (LADP). EACOP will pump more than 200,000 ture benefits from LNG exporting in the global
ly paves the way for the barrels per day (bpd) of oil from the Kingfisher market.”
parties to strike a deal and Tilenga fields along a 1,443-km route from She also indicated that she expected work on
by year-end and begin
production a few years western Uganda to the Tanzanian port of Tanga. the scheme to move forward quickly now that
later. Suluhu is a firm supporter of EACOP, which this first step had been taken. “I long to see phase
is expected to account for about half of LADP’s two of the negotiations being timely wrapped up
WHAT NEXT: $10bn budget. But she has also been working [in December of this year], so that we pave the
The schedule for imple- for more than a year to restart negotiations on way for the project’s implementation as planned
mentation of the deal the $30bn Tanzania LNG project and keep them later in 2025,” she was quoted as saying by The
will be hard to keep in going – unlike Magufuli, who did little to sort Citizen.
light of decarbonisation out the commercial disputes that arose between The president appears to be saying that her
deadlines and compe- the government and the international oil com- administration expects work to proceed quickly
tition from other LNG panies (IOCs) that were involved in the project. enough that Shell and Equinor can start offshore
suppliers. Her efforts have now borne fruit. On June gas production in 2025 – and that the LNG plant
11, her government signed an initial Host Gov- can begin operating in the same year. If so, this
ernment Agreement (HGA) on the project with is a more ambitious timeline than previously
Equinor (Norway) and Shell (UK), the opera- discussed, as Tanzanian authorities have said in
tors of the three offshore blocks that are slated the past that they believed construction work on
to supply feedstock to the future Tanzania LNG the LNG plant might start in 2023, in time for
plant. In turn, this document paves the way for production to begin in 2028.

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