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Shell, Equinor call on Tanzania to make

“critical decisions” about LNG project

TANZANIA REPRESENTATIVES of Royal Dutch Shell “It is time to know if the project is viable or not
(UK/Netherlands) and Equinor (Norway) have and understand who is blocking it.”
urged Tanzania’s government to wrap up talks on The president was quoted as saying that
an ambitious LNG project as quickly as possible, these measures would allow her administration
so that the scheme is not sidelined or otherwise to decide whether to continue working with
affected by the upcoming transition to renewable Equinor and Shell or to look for another partner.
fuels. “If the existing investors are not willing, then you
In an editorial published by The Citizen, a [the ministry] must find others,” she remarked.
Tanzanian newspaper, Equinor’s country man-
ager Mette Halvorsen Ottoy and her counterpart The Tanzania LNG scheme envisions the
at Shell, Frederik Grootendorst, asserted that the construction of a gas plant with two or three liq-
time had come for “critical decisions” on the Tan- uefaction trains in Lindi, a coastal town in the
zania LNG project. south-eastern part of the country. The facility
“Natural gas has a key part to play in the global would use gas from three deepwater offshore
energy transition, but the window in which to sites containing about 35 trillion cubic feet
act to develop new resources is limited,” they (991bn cubic metres) – Block 2, assigned to
wrote. “Tanzania is encouraged to do so now by Equinor, and Blocks 1 and 4, assigned to Shell –
demonstrating its commitment and successfully as feedstock for LNG production.
restarting negotiations on the host government Equinor has expressed scepticism about the
agreement and pledging to conclude them in a viability of Tanzania LNG. Earlier this year, the
timely manner.” Norwegian major wrote the book value of the
Fast action will help the East African state project down by $982mn, saying that its break-
realise the potential of its offshore gas reserves, even price was likely too high to be profitable.
they added. “A huge opportunity for Tanzania to It has stopped short of abandoning the scheme,
benefit from its rich gas resources is within its though, and says it may resume work at a later
grasp. 2021 must be the year when action is taken time.
to conclude the negotiations,” they said. Meanwhile, the project is running far behind
Ottoy and Grootendorst were referring to schedule. Tanzanian officials had previously said
Tanzanian authorities’ decision to suspend talks they hoped to sign a host government agreement
on the LNG project in late 2019 in response to (HGA) with Shell and Equinor in 2019, and this
then-President John Magufuli’s demand for would have allowed the two majors to begin
a review of the country’s production-shar- work in 2022. However, these deadlines were
ing regime. The Magufuli administration had not met, partly because of commercial disputes
intended to resume discussions late last year, between the companies and the government,
after Tanzania’s presidential election. However, partly because of Magufuli’s push to review the
this decision to wait did not pay off; Magufuli production-sharing regime and partly because
did win another term, but he did not return to the Magufuli administration regarded the East
the matter of Tanzania LNG before his death in Africa Crude Oil Pipeline (EACOP) project as a
March 2021. higher priority.
By contrast, his successor Samia Suluhu Has- According to Ottoy and Grootendorst, these
san has said she wants to push the long-delayed delays have narrowed the window for develop-
project forward. Earlier this month, Hassan ment of the offshore gas reserves. “Timing is crit-
urged the Ministry of Energy and Minerals to ical in terms of the project’s success,” they wrote
bring negotiations on the $30bn LNG project to in the editorial. “A mega-project like this takes
a close as quickly as possible. She also instructed years to plan, design and execute, and hence, crit-
the ministry to determine whether Tanzania ical decisions are required now.”™
LNG was facing any specific obstacles, saying:

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