A senior executive in Tanzania’s government said this week that negotiations to resolve the various issues surrounding the proposed $30 billion liquefied natural gas project at Lindi could be completed by October.
Energy Minister Medard Kalemani told a gathering of stakeholders in Lindi that the government wants negotiations with the project’s lead proponents — Norway’s Equinor and Anglo-Dutch supermajor Shell — to be completed in four months.
Earlier this month, the minister told parliament that construction of the Tanzania LNG facility is expected to begin in July 2023 and be completed by June 2028.
Speaking in Lindi, Kalemani was sited by the local Guardian newspaper as saying: “President Samia Hassan said the plant should be constructed speedily and we have mobilised ourselves to implement her directive. The negotiations are geared to having the project implemented.”
He called on people in Lindi and the neighbouring areas to ready themselves for the business opportunities that should arise from the Tanzania LNG scheme, stressing that, despite years of delays, Hassan’s government is confident the project will move ahead.
“These huge projects should be beneficial to the government, people and investors," the minister said.
Kalemani has instructed state-owned Tanzania Petroleum Development Corporation (TPDC) management and stakeholders to immediately begin talks on marking the boundaries of the proposed project site.
TPDC managing director James Mataragio said the project will employ about 15,000 workers at peak construction and create 5000 local jobs when the facility is up and running.
Early this month, Kalemani told parliament that a host government agreement (HGA) and fiscal agreements underpinning the LNG scheme would be finalised in 2021.
“The tasks to be implemented include completing HGA negotiations and reviewing production sharing agreements.”
He said land acquisition is under way and that, as of the end of March, landowners in Lindi had been compensated to the tune of 5.71 billion shillings ($2.4 million).
On 5 May, Kalemani and Tanzanian officials met Equinor and Shell representatives in Dodoma.
During the meeting, the minister stressed that “citizens should be informed what is going on, what is their responsibility, the importance of the project".
Kalemani asked all sides to “not delay” discussions “because the country needs the project and the government plans to implement it very fast".
An Equinor spokesman said: “We are, of course, pleased and encouraged by President Samia Hassan’s recent comments on LNG on a number of occasions where she stressed the need to now progress the project.
“We continue to engage with the authorities to progress our project in Tanzania. However, there is still a lot of work to do and a long way to go.”
The spokesman remarked that “before we can progress... any further, we need to get a commercial, fiscal, and legal framework in place that demonstrates a viable business case".
He said Equinor continues to engage with the government with the aim to resume negotiations that have been on hold since 2019.
“We have met with the authorities where they indicated a will to restart negotiations of an HGA. Equinor is ready to engage in such negotiations when the government decides to do so.”
Between them, Shell and Equinor have discovered about 50 trillion cubic feet of gas in offshore blocks 1, 2 and 4.
This resource base is split about equally between blocks 1 and 4, where Shell’s partners are Singapore’s Pavilion Energy and Medco Energi of Indonesia; and Block 2, where Equinor’s partner is ExxonMobil.
The base case development plan would see the gas sent from multiple deep-water subsea wells to a 10 million tonnes per annum LNG plant at Lindi via a complex array of flowlines and pipelines.
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