Tanzania signs Ksh.3.5 trillion natural gas project with Shell for export
Tanzania has signed a framework agreement with Norway’s Equinor and Britain’s Shell for the construction of a Ksh.3.5 trillion project to start exporting Liquefied Natural Gas (LNG).
Tanzania’s President Samia Suluhu was present during the signing of the deal on June 11 which will foresee a final investment decision by 2025, and a start of operations by 2029-2030.
“We have reached a good stage of discussions about the LNG project, but much work is still waiting for us to talk and make it competitive,” said President Suluhu.
LNG plant will be built in Tanzania’s southern coastal town of Lindi, jumpstarting the country’s exportation of gas estimated at more than 57 trillion cubic feet (1,630 billion cubic metres).
“We have never reached this stage of natural gas development in the history of our country,” said Tanzania Energy Minister January Makamba during the signing ceremony in the capital Dodoma.
“This project will significantly change our economy,” Makamba said.
“Tanzania’s geographical positioning makes it easy to transport the natural gas to other countries, especially Asian (ones), which are looking for new sources of energy.”
Equinor is exploiting a block, some 100 kilometres (60 miles) off the coast of Lindi, where it says it has found 20 trillion cubic feet (566 billion cubic metres) of natural gas.
Equinor country manager for Tanzania, Unni Fjaer, said the deal has been long in the making.
“We had many stops but through the resolve of the government, we kept engaging, discussions and we believe Tanzanian gas presents a huge opportunity,” she said.
Plans for the LNG plant had stalled for several years under her predecessor John Magufuli, but Suluhu revived the negotiations in October last year.
With LNG in place, Tanzania will benefit from several aspects that include receiving the total project income through a share of the production allocated, corporate tax, various levies, skills and transfer of technology.
This is set to bring an influx of jobs, multiple opportunities for local companies, new Infrastructure and a boost in economic activities.
In May last year, Kenya and Tanzania signed a deal to build an LNG pipeline from Dar es Salaam to Mombasa in what the two countries’ leaders said was part of a long-term project to share energy resources.
In April same year, President Suluhu also toured Uganda where she and her Ugandan counterpart Yoweri Museveni signed a deal for the construction of an oil pipeline which will traverse the two countries from western Uganda all the way to the Tanzanian seaport of Tanga.
Tanzania has signed multiple deals with foreign countries and revived tens of projects since President Suluhu took reign on March 19, 2022 following the death of the late firebrand politician John Pombe Magufuli.