Shell and Equinor moving forward with giant Tanzania LNG project

Shell and Equinor are expecting to sign a host government agreement and a production sharing agreement for the giant Tanzania LNG export project in the following weeks.

Shell Tanzania chair Jared Kuehl and Equinor’s Tanzania country manager Unni Fjaer revealed this in separate LinkedIn announcements last week.

In March, Tanzania’s energy minister January Makamba said that discussions between the government of Tanzania and the project’s investors Shell, Equinor, and their partners were completed.

The minister said at the time that experts were working on two large contracts, and each of the contracts has more than 600 pages.

One contract is for the HGA and the other is the PSC contract for three natural gas blocks which will supply the LNG project worth more than $30 billion. New reports suggest that the value is now about $42 billion.

Equinor and Shell are both operators of large gas discoveries off the country’s coast.

The Norwegian firm and partner ExxonMobil discovered more than 20 trillion cubic feet of gas in Block 2 offshore Tanzania, according to its website.

Also, Shell has about 16 Tcf of natural gas in Block 1 and 4.

The capacity of the planned LNG export facility in Lindi is expected to be at least 10 million tonnes per year.

“Significant milestone”

Equinor’s Fjaer said in the post that “negotiations on key agreements between the international energy companies (IECs) and the Tanzanian government are now concluded, and the documents are now subject to final reviews and approvals before their expected signing in the following weeks.”

Shell’s Kuehl also confirmed this in his post.

“Subject to successful completion of the assurance process over the coming weeks, we anticipate signing a host government agreement (HGA) that covers the onshore elements of the project, and a production sharing agreement (PSA) that oversees its upstream component,” he said.

Kuehl said this is a “significant milestone” on the long path to realizing such a major project like Tanzania LNG, with the next steps involving a period of time of detailed engineering design work.

“Equinor and Shell, as joint operators, are pleased with the steps forward and remain focused on continuing to work together with our partners (ExxonMobil, MedcoEnergi, and Pavilion Energy), TPDC and of course the government of Tanzania,” he said.

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