Tanzania LNG Terminal

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Tanzania LNG Terminal is a proposed LNG terminal in Lindi Region, Tanzania.

Location

The map below shows the location of the project, in Lindi District, Lindi Region.

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Project Details

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Since 2010, large natural gas fields have been discovered off the coast of Tanzania. In September 2016, six oil & gas firms involved in extraction in these gas fields (the BG Group, Ophir Energy, Exxon Mobil, Equinor, Shell, and Pavilion Energy) entered into talks with the Tanzanian government about building a liquefied natural gas (LNG) export terminal near the town of Lindi.

The terminal would cost $20-30 billion, and would have two liquefaction trains, with total capacity of 10 million metric tons per year (mtpa), or 1.43 billion cubic feet per day (bcfd). Plans call for construction to be completed in 2021.[7][8] Land for the project was already acquired by January 2016, and compensation & resettlement are underway.[9]

Talks are ongoing, and it could be years before a final investment decision (FID) is issued.[10][11]

In May 2019, Tanzania's Energy Minister reported that construction will begin in 2022.[12]

In January 2021, the Norwegian energy company Equinor announced a loss of US$982 million connected to its involvement in the Tanzania LNG terminal.[13] The future of the project was unclear following this announcement, although media reporting of the Equinor announcement said that the financial viability of the project was not sufficient for Equinor to keep it on its balance sheet.[2]

However, in April 2021, developers Shell and Equinor were appealing to the newly elected Tanzanian government to support LNG projects, suggesting that the project may be back-on-track.[5] By the end of the month, Bloomberg reported that a Tanzanian government negotiation team had been formed ahead of the resumption of talks with the project's investors, and that it was hoping to conclude an agreement within six months.[4] However, industry commentators warned that the government would have to compromise on contractual and regulatory matters if it hopes to secure new investments. Diplomat and lawyer Mwanaidi Maajar has noted: "[Tanzania LNG Backers will be looking at a guaranteed licence that has a certain duration, which cannot be taken away without due process. Companies will want to look at the repatriation of costs. They will also be looking at approval procedures and how to allow expatriates to go in and out. Can decisions be challenged through an appeal or a judicial process, and how quickly can disputes be resolved?"[14]

Articles and resources

References

  1. About Us, Pavilion Energy, accessed January 29, 2021
  2. 2.0 2.1 Equinor Stops Tanzania LNG Project, Writes Off $982 Million, LNG Global, Jan. 29, 2021
  3. 3.0 3.1 2020 World LNG Report, page 102, International Gas Union, Apr. 27, 2020
  4. 4.0 4.1 Fumbuka Ng'wanakilala, Tanzania Expects Agreement on LNG Project Within Six Months, Bloomberg, Apr. 29, 2021
  5. 5.0 5.1 Ed Reed, Shell, Equinor call for LNG progress from Tanzania, Energy Voice, Apr. 14, 2021
  6. BloombergNEF LNG Export and Import Projects--Q4 2020, BloombergNEF, January 21, 2021
  7. Tanzania explores construction of LNG plant, export terminal, The East African, 18 Sept. 2016.
  8. Tanzania says LNG project could cost up to $30 bln, CNBC Africa, 13 Nov. 2014.
  9. Land deal finalized in preparation for Tanzania LNG project, World Oil, 29 Jan. 2016.
  10. No FID to be made on Tanzania LNG project for at least five years, LNG Industry, 17 Nov. 2016.
  11. Tanzanian government eyes FEED on LNG plant 'soon', Interfax Global Energy, 1 Dec. 2016.
  12. Fumbuka Ng'wanakilala and Nuzulack Dausen, Tanzania says construction of LNG plant to start in 2022, Reuters, May 28, 2019
  13. Impairment at Tanzania LNG Project, Equinor press release, Jan. 29, 2021
  14. Ed Reed, Long haul ahead on Tanzania LNG plans, Energy Voice, May 4, 2021

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External resources

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