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Tanzania’s government recently concluded discussions with supermajors Shell and Equinor regarding the potential construction of a $30 billion LNG export plant. The plant is expected to take advantage of the country’s vast offshore natural gas resources.
The Tanzanian energy ministry said that talks are complete and that the experts will soon start drafting contracts. According to Tanzania’s Energy Minister, January Makamba, two contracts are being drafted: one for the host government agreement and the other for blocks 1, 2, and 4 that will provide the LNG project with natural gas.
In 2016, Shell acquired BG Group, along with its partners Medco Energi (Ophir Energy) and Pavilion Energy. The company became the operator of two offshore blocks in Tanzania, Block 1 and Block 4.
Natural gas reserves totaling 16 trillion cubic feet (Tcf) were discovered in the blocks.
For its part, Equinor began exploratory drilling operations in Block 2 off the shore of Tanzania in 2011. Since then, it has made nine discoveries, totaling an estimated 20 Tcf of in-place gas.
What are the hurdles faced by the LNG export plant project’s development?
The LNG plans have so far been hampered by regulatory obstacles but the progress in the discussions provides Tanzania and the majors confidence that they may be able to begin monetizing the vast offshore gas resources towards the end of the 2020s or early 2030s.
The government of Tanzania aims to make a final investment decision for the LNG project in 2025.
Russia is no longer seen as a desirable provider of energy for the West. Analysts and industry executives say Africa might play a crucial role in helping Europe with its gas supply.
The first shipment of LNG generated from the Coral gas field in the deep water of the Rovuma Basin offshore Mozambique, Tanzania’s southern neighbor, was announced by Italy’s Eni at the end of last year.
The largest LNG trader in the world, Shell, released a bullish outlook on the LNG market until 2040 last month. According to the supermajor, China might increasingly provide greater flexibility to the global LNG market. LNG could become a primary energy supply for Europe to satisfy its demands for energy security. |
