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Tanzania To Begin Talks With Majors On $30B Deepwater LNG Project

Tanzania’s government will start this month talks with major international firms to define the commercial terms for a deepwater liquefied natural gas (LNG) project off the coast of the east African country expected to be worth US$30 billion.

Negotiations are set to begin this month and to conclude by September, The East African news outlet quoted Tanzania’s Energy Ministry as saying.

Major international companies have been exploring for gas offshore Tanzania and have found sufficient quantities for a potential LNG plant.

The development of such project, however, has been stalled due to the lack of a host government agreement (HGA) setting the legal, fiscal, and commercial terms of the project.

“A deep-water LNG plant is a large project that requires large upfront investments. To ensure that all parties benefit from such a project, a stable and predictable framework for more than 30 years of the plant is essential,” Equinor spokesperson Erick Haaland told The East African.

“We trust that the government of Tanzania has a long-term view on this major industrial investment,” Haaland added.

Norway’s Equinor has been operating in Tanzania since 2007 when it signed a Production Sharing Agreement (PSA) for Block 2 with Tanzania Petroleum Development Corporation (TPDC). Equinor’s Tanzanian unit is the operator of the block with a 65-percent participating interest, while U.S. ExxonMobil is partner with a 35-percent working interest. TPDC has the right to participate with a 10-percent stake.

Equinor has made nine discoveries with estimated volumes of more than 20 Tcf of gas in place.

Royal Dutch Shell holds stakes in two blocks adjacent to Equinor’s block 2. According to Shell’s website, “all these blocks together hold sufficient gas to enable a shared onshore LNG liquefaction plant.”

The government of Tanzania has allocated land for this facility in Lindi, located on the southern Tanzanian coast.

Now the government and the international majors need to hammer out the legal and commercial framework of the LNG project, which Tanzania says would be done by September.

By Tsvetana Paraskova for Oilprice.com

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