Norway’s Equinor said Friday it decided to write down the book value of its Tanzania LNG project on the company’s balance sheet by $982 million.
The energy firm says it would record this move in adjusted earnings for EPI division in its fourth-quarter results that it plans to issue on February 10.
“While progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet,” the firm said.
The TLNG project has an anticipated breakeven price “well above the portfolio average for Equinor and is, at this time, not competitive within this portfolio,” it said.
Equinor’s oil and gas projects with expected start-up by 2026 have an average breakeven below $35/bbl based on today’s estimates. Similar for non-sanctioned oil and gas projects with expected start-up within this decade, the average breakeven is below $40/bbl, it said.
The firm added it would continue to engage with the government of Tanzania in negotiations on a commercial, fiscal and legal framework that “may provide a viable business case for TLNG in the future.”
$20 billion LNG development
The Norwegian firm has with partner ExxonMobil discovered more than 20 trillion cubic feet of gas in Block 2 offshore Tanzania.
It began drilling in the offshore Block 2 in 2011, with a total 15 exploration wells resulting in nine discoveries.
This gas should feed the proposed Tanzania LNG export project but the long-delayed development has never seen the light of the day.
Furthermore, the firm previously said that the Block 2 gas would go to a liquefaction plant in Lindi with a potential capacity of 7.5 million tonnes per year.
Equinor expected the cost to build such a project to reach about $20 billion.
In addition, the firm started negotiations with the Tanzania government back in 2018 to set out the commercial and fiscal framework for the LNG project.