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Shell, Equinor sign LNG framework deal with Tanzania

© BloombergTanks onboard the Karmol LNGT Powership Asia floating storage and regasification unit (FSRU), operated by Karpowership, viewed from the ship's bridge whilst docked at Cape Town port in Cape Town, South Africa, on Tuesday, April 19, 2022.
Tanks onboard the Karmol LNGT Powership Asia floating storage and regasification unit (FSRU), operated by Karpowership, viewed from the ship's bridge whilst docked at Cape Town port in Cape Town, South Africa, on Tuesday, April 19, 2022.

Major investors have signed a framework agreement with Tanzania, marking progress for the country’s LNG aspirations.

President Samia Suluhu Hassan oversaw the signing of the deal on June 11.

Tanzanian Energy Minister January Makamba and deputy attorney-general Evaristo Longopa signed the framework deal on behalf of the host country. Equinor Tanzania country manager Unni Merethe Skorstad Fjaer and Shell Tanzania country chair Jared Kuehl signed on behalf of the investors.

The president welcomed the signing, which will cover the onshore processing. “The 70 trillion shillings [$30 billion] to be invested will bring about a major revolution to boost our economy and the well-being of Tanzanians,” she said.

“Today marks an early milestone in our collective journey towards progressing the LNG opportunity in Tanzania,” said a Shell representative.

“The initialling of the framework agreement for the Tanzania Gas and LNG Project (TLNG) with the government of Tanzania is a reflection of the hard work and joint prioritization of the potential LNG Project by investors and the administration of H.E. President Samia Suluhu Hassan.”

The companies intend to build the LNG plant in Lindi, in Tanzania’s south.

Transforming Tanzania

The Citizen newspaper reported Hassan as saying LNG would bring “both capital and revenue”. As such, the project would have a transformative impact on Taznania.

She expressed the hope that the companies would reach a host government agreement (HGA) in December this year.

The companies and government will need to reach further agreements in order to reach a final investment decision (FID). These include the HGA, front-end engineering and design (FEED) studies and commercial agreements on long-term gas sales.

Companies discovered gas offshore Tanzania around 10 years ago. Development was challenging on a number of fronts, not least from the then president, John Magufuli. He died in early 2021, with Suluhu Hassan stepping up from vice president to president.

In February 2021, Shell’s then head of gas Maarten Wetselaar said the resource was “fantastic” but that the issue was political risk.

“When we overcome that we will push the go button. Fundamentally, that’s very valuable LNG. We’re working on it, but we’re not in a hurry,” Wetselaar said.

Hassan has overseen a noted improvement in the country’s approach to investment. In January this year, Tanzania appointed Baker Botts and GaffneyCline to lead talks with foreign investors on the LNG project.

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