Tanzanian authorities have completed negotiations with British energy giant Shell and Norway’s Equinor to build a terminal for exporting liquefied natural gas (LNG), allowing the country to tap into its vast offshore resources.
The estimated investment in the facility is $30 billion, and the parties are in the process of drafting contracts, according to the African country’s Energy Ministry on Twitter on Tuesday.
According to Tanzanian Energy Minister January Makamba, one of the deals will cover the development of offshore fields operated by Shell that will provide gas for the LNG project.
Shell and its partners Medco Energi (Ophir Energy) and Pavilion Energy became the operators of two offshore blocks in Tanzania. The deposits have a total proven natural gas reserve of 16 trillion cubic feet (Tcf).
Meanwhile, Equinor has discovered nine gas deposits in Tanzania totaling more than 20 Tcf since 2011, and is currently conducting exploration and drilling work.
Regulatory hurdles have hampered the start of large-scale LNG production in Tanzania thus far, but recent progress in negotiations may accelerate plans to monetize the vast offshore gas reserves in the late 2020s or early 2030s.
Tanzania’s government anticipates making a final investment decision on the LNG terminal in 2025.
Equinor and Shell intend to build the LNG plant in Tanzania’s southeast Lindi region, alongside Exxon Mobil, Ophir Energy, and Pavilion Energy.
