Tanzania to begin construction of $30 billion natural gas project in 2023

Tanzania’s government has laid out plans to kick start the construction of a delayed $30 billion liquefied natural gas project in 2023 as talks with interested companies resume.

In an address to lawmakers, Minister of Energy Medard Kalemani said construction is expected to take about five years. Plans for an LNG plant on Tanzania’s southern coast and a pipeline connecting offshore fields have been under consideration since 2014 but talks stalled for more than a year during the reign of former President John Pombe Magufuli.

The project has gained momentum after President Samia Suluhu directed her administration to fast track delayed investments in May. The announcement on construction of the project comes months after Total suspended work on a similar plan in neighboring Mozambique following insurgent attacks.

Tanzania neighbors Mozambique to the north but it has not yet faced any similar attacks on its soil. Its gas project has lagged its southern neighbor but is now set to benefit from Suluhu’s push to boost investment and further accelerate economic growth in a nation that has been recording one of the fastest rates of economic growth in the world.

Equinor ASA took a $982 million impairment on the project following failure to settle fiscal and commercial terms with Tanzania. “We expect to conclude negotiations for a host government agreement and review production sharing agreements by the end of June 2022,” Kalemani said.

The government has finalized compensation procedures with more than 600 residents of Lindi, a town in Southern Tanzania to pave way for the project, he added.

Tanzania and the firms are discussing a proposed two-train onshore LNG plant to export gas from the East African nation. Other project partners include Royal Dutch Shell, Exxon Mobil Corp, Sophi Energy and Pavilion Energy Pte.

The government is also building a pipeline network to connect and distribute gas to more than 10,000 homes and factories, mostly in the commercial hub of Dar es Salaam, Kalemani said.

In recent years Tanzania and Mozambique have been sub-Saharan Africa’s foremost gas frontier-investment destinations after explorers found more than 100 trillion cubic feet of the resources in their territories. Mozambique’s projects with companies including Total, Eni SpA and Exxon Mobil and a projected investment of at least $60 billion are threatened by an armed insurgency in the gas rich regions in the north of the country.

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