Equinor, Tanzania to start talks on gas project
Norwegian energy firm Equinor is ready to start talks with Tanzania on developing a liquefied natural gas project based on a deepwater offshore discovery, the company said last week.
Tanzanian President John Magufuli has told government officials to proceed with negotiations to work out the commercial and fiscal framework for the LNG project.
Equinor is a majority stateowned energy company formerly known as Statoil.
“Equinor will now proceed with partner Exxonmobil to negotiate for a host government agreement,” said a spokesman for the company. He added that it was too early to say how long talks with the government would take and how much the project would cost.
In 2014, Tanzania said that a planned LNG export plant would cost up to $30 billion. Royal Dutch Shell, which operates deepwater Blocks 1 and 4, adjacent to Equinor’s Block 2, previously sought to develop the LNG project in partnership with Equinor and Exxon Mobil.
“Shell continues to work with Tanzania to establish the most cost-effective and competitive solution for the LNG project in the country,” a company spokeswoman said in an e-mail. “We believe the government is best placed to lead the way forward to deliver the project.”
Shell declined to say whether it would join Equinor and Exxon Mobil or would pursue separate talks with the government. Shell said on its website the three blocks had sufficient gas reserves to build an onshore LNG plant, but the company was not immediately available to comment on whether it would join the other two in the talks.
Shell estimates its two blocks hold about 453 billion cubic metres of recoverable gas, similar to the volumes in Equinor’s Block 2.
In June, Exxon Mobil was reportedly seeking to sell its 25 per cent stake in Block 2 as it was focusing on an even bigger project in neighbouring Mozambique.
But insiders say the Tanzanian government does not want to repeat the mistakes it made when signing mining pacts, so it is taking its time in commencing negotiations over the commercial framework agreement for the LNG project in the south.
Energy Minister Medard Kalemani said, “It is not our intention to delay investors or the take-off of the project, but we want to be content with the agreements.”
Tanzania has been exploring for natural gas for more than 50 years, and started talks for further development in 2016.
The framework for the proposed plant will outline and define all attributes of the project, who is involved, the prices and all appropriate allocations. The firms say investment decisions have been put on hold as they await the outcome of negotiations with the government.
Equinor wants to negotiate a deal to develop an offshore liquefied natural gas project in Tanzania.