Tanzania LNG Terminal

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

• Operator: Equinor, Shell
• Owner: Tanzania Petroleum Development Corporation, Equinor, Shell, ExxonMobil, Pavilion Energy, MedcoEnergi
• Parent: Tanzania Petroleum Development Corporation, Equinor, Shell, ExxonMobil, Temasek, MedcoEnergi
• Location: Lindi District, Lindi Region, Tanzania
• Coordinates: -9.96, 39.708889 (exact)
• Type: Export
• Trains: 2
• Capacity: 10 mtpa, 1.43 bcfd (5 mtpa per train)
• Cost: US$42 billion.
• Financing:
• Status: Proposed
• FID status: Pre-FID (2027)
  • Formerly Pre-FID (2025)
• Start Year: 2031
  • Formerly 2029-30

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. Land for the project was already acquired by January 2016, and compensation & resettlement are underway.

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

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

In January 2021, the Norwegian energy company Equinor announced a loss of US$982 million connected to its involvement in the Tanzania LNG terminal. 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.

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. 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. 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?"

In March 2022, Upstream reported that the governments talks with Equinor and Shell were progressing, and that a Host Government Agreement (HGA) needed for the project to move forward could be completed by the end of May.

In June 2022, the Government of Tanzania signed a framework agreement with Shell and Equinor as a precursor to the government's issuing of an HGA, expected before the end of the year, which will outline the project's technical, commercial, and legal terms. It was reported that following the signing of the HGA, the project's front-end engineering and design (FEED and pre-FEED) will be completed within three years, a FID would be taken by 2025, and a four to five construction period would follow before the project comes online by 2029–2030.

In May 2023, Equinor, Shell, and ExxonMobil agreed to a Host Government Agreement framework with the government of Tanzania. According to GIIGNL, the agreement includes a regulatory framework, a production sharing agreement, and elements regarding land use and security. The same month, technical analyses showed that the costs of the project could have increased to US$42 billion.

In August 2023, Tanzanian President Samia Suluhu Hassan appointed Doto Biteko as energy minister, replacing January Makamba. This was reportedly done to reshuffle the cabinet ahead of expected approval of the Tanzania LNG Terminal.

As of May 2024, negotiations for Tanzania LNG were delayed by proposed government changes to a financial agreement reached last year.