Royal Dutch Shell Plc and Equinor ASA have called for Tanzania to act quickly on clearing the way for a liquefied natural gas project that has made limited progress.
The East African nation needs to demonstrate its commitment to the project, “successfully restarting negotiations on the Host Government Agreement and pledging to conclude them in a timely manner,” Frederik Grootendorst, Shell’s country chair, and Mette Halvorsen Ottoy, Equinor’s country manager, said in an op-ted published in local paper The Citizen.
Talks on the key agreement needed for planning and building the LNG terminal effectively stopped in 2019. Equinor decided less than three months ago to take a $982 million impairment, which it said would be reversible, on the project after failing to settle terms regarding taxes, government takes and commercial aspects with the government.
The two companies also signed a Memorandum of Understanding early in the year for collaboration on the liquefaction facility.
“A mega project like this takes years to plan, design and execute and hence critical decisions are required now,” the company officials wrote, warning that a deadline looms. “Natural gas has a key part to play in the global energy transition, especially as a complementary fuel for intermittent renewable sources, but the window in which to act to develop new resources is limited.”
Proposals to build a plant on the Tanzanian coast, connecting its offshore fields by pipeline, have been in the works since 2014. Investor sentiment toward the East African nation soured after an overhaul of mining legislation by the government enabled it to renegotiate contracts.
Positive remarks about LNG by Tanzania President Samia Suluhu Hassan, who was sworn in as the nation’s leader last month, were also noted by the companies. “This is a clear sign from the top of the political will of the government of Tanzania to realize the project,” they said.
