Tanzania Petroleum Development Corporation’s Managing Director, Dr James Mataragio said in Dar es Salaam recently that the  government in  talks with the consortium of International Oil Companies  led by Royal Dutch Shell and Equinor in paving way for the country LNG final investment decision.

He noted that progress has been made with TPDC paying over 5.4bn/- compensation to villagers in Lindi Region to pave way for the gigantic project.

“We are making progress because we have just completed land acquisition after compensating all affected people in Lindi Region.

We are preparing to resume HGA negotiations that will lead us to FEED. The HGA negotiations are due to start any time from now,” Dr Mataragio said.

 “Construction of this project is expected to start in 2022 and will be concluded in 2028. The project will have capacity to produce 10 million tonnes of LNG a year.” Dr Medard Kalemani told parliament.

In his budget speech for 2020/21, Dr Kalemani noted that the government since last year has been holding individual talks with the oil companies to accept the country’s proposed LNG agreement with all ended in deadlocks particularly on how to share revenue from the exports.

Commenting on progress being made in implementing the LNG project, Equinor ASA Press Spokesman, Erik Haaland said for the LNG project to proceed, it will depend on having a solid framework in place. The key project agreements are the production sharing agreement and HGA, together because they form the framework for the investor to mature the project towards a final investment decision.

 “Any delay in agreeing and establishing these agreements, will result in postponement of the project start-up. Equinor believes there is a good opportunity for the parties to negotiate a framework that will benefit Tanzania, Equinor and the other partners in the project,” Halaand stated.

However, Equinor believes in a long term sustainable LNG market. Other members of the consortium led by Equinor along with Royal Dutch Shell are Exxon Mobil, Ophir Energy and Pavilion Energy.

To buttress Equinor’s position, Shell Tanzania’s External Relations Manager, Patricia Mhondo said the company is keen to move forward with the HGA discussions and look forward to government’s guidance and clarity on how and when that process will recommence.

“The HGA is an important milestone as it seeks to establish a clear legal, fiscal and commercial framework for the LNG project. The completion of this required project framework will provide a clear milestone towards maturation,” Mhondo said.

She further noted that Shell Tanzania which is a subsidiary of Royal Dutch Shell currently the world is facing a challenging macroeconomic environment particularly due to the dual challenges of low energy demand as a result of the global impact of the novel coronavirus outbreak as well as the oversupply of oil and LNG in the market.

“Most international oil and gas companies and their shareholders are increasingly scrutinizing their global project portfolio. With an increasingly cash and capital constrained world, only the best and most competitive projects will get funding going forward,” she alerted.

“We look forward to work with the government of Tanzania to make the project competitive within the global market environment,” the Shell Tanzania External Relations Manager added.

Shell and its partners have so far invested over US$2B in exploration and appraisal in the country and are keen to develop and commercialize the gas in blocks 1 & 4 offshore Lindi and Mtwara Regions.