Tanzania has entered a framework agreement with Equinor and Shell, a move that would pave way for final investment decision in 2025 for the construction of a $30bn liquefied natural gas (LNG) export terminal.
The facility will be constructed near huge offshore natural gas discoveries in deep waters off Tanzania’s southern coast.
Its construction has been held up for years because of regulatory delays, reported Reuters.
The African nation’s Energy Minister January Makamba said: “This step is very important.”
The signing ceremony held at the state house in capital Dodoma had also seen attendance by Tanzania President Samia Suluhu Hassan and top officials of energy firms.
Shell vice president and board chairman in Tanzania Jared Kuehl said: “We believe Tanzania has advantages because it has … (a) strategic location and the opportunity to deliver a competitive and investable project.”
Last year, Equinor has recorded a $982m writedown on the project after it decided that it may not be sufficiently profitable.
Equinor now stated that it was too early to comment whether it would reverse the writedown following the latest agreement.
Shell and Equinor along with Exxon Mobil, Ophir Energy and Pavilion Energy, intend to construct the LNG plant in Lindi region.
Tanzania’s Block 2, which is operated by Equinor and Exxon Mobil holds a stake, is estimated to feature over 20 trillion cubic feet of gas.
For the LNG project, Equinor plans to work with Shell.
Shell is the operator of Block 1 and Block 4, which together have 16 trillion cubic feet in estimated recoverable gas.
The African national already makes use some of its natural gas discoveries to generate power and to operate manufacturing plants.
It also intends to construct a fertiliser plant.
The country’s total recoverable gas is estimated at 57.54 trillion cubic feet.
Image: The terminal will be constructed near huge offshore natural gas discoveries in deep waters off Tanzania’s southern coast. Credit: Kristina Kasputienė from Pixabay.