Tanzania’s LNG venture gains interest as African nations secure stakes in the project.
Tanzania’s liquefied natural gas (LNG) project, estimated at USD 42 billion after recent technical analysis, has captured the attention of African countries seeking investment opportunities. With the signing of the host government agreement imminent, the project is poised to become the largest energy endeavor in eastern and southern Africa.
Rising costs and exploration opportunities
The projected cost of Tanzania’s LNG project has escalated from the initial estimate of USD 30 billion to USD 42 billion, primarily due to offshore drilling and piping, according to recent technical analysis. The Ministry of Energy’s Permanent Secretary, Felchesmi Jossen Mramb, confirmed ongoing analyses and highlighted the evolving nature of the project’s cost. “There is a lot of analysis ongoing. The recent technical analysis shows that offshore drilling and piping will push the project to USD 42 billion,” said Mramb.
Meanwhile, Tanzania has unveiled 26 exploration areas, both onshore and offshore, as part of its first licensing round since 2013. These areas, presented during the 10th East African Petroleum Conference and Exhibition, aim to attract investments and expand hydrocarbon reserves.
Strategic partnerships and project milestones
Tanzania aims to develop its already discovered 57.54 trillion cubic feet of gas by 2028, with collaboration from the Tanzania Petroleum Development Corporation (TPDC) and international oil companies, Shell Plc and Equinor ASA. As the lead partners, these entities will contribute to Tanzania’s ambition of becoming the LNG hub in the region.
Energy Minister January Makamba confirmed the completion of project negotiations in March and the ongoing drafting of contracts, including the Host Government Agreement (HGA) and a collaboration agreement for linking Blocks 1, 2, and 4. Blocks 1 and 4 are operated by Shell, while Block 2 is managed by Equinor.
Project timeline and regional collaboration
Upon signing the HGA, the LNG project will initiate pre-front-end engineering design (FEED) feasibility studies, which are expected to last two years. Shigela Malosha, Director of Contracting and Licensing at the Petroleum Upstream Regulatory Authority, anticipates an additional three years for the FEED phase.
However, the final investment decision is now projected for 2028, delaying construction by three and a half to five years, depending on the technology employed. “Uganda and Kenya have each signed a memorandum of understanding with Tanzania to buy its LNG, with the requisite infrastructure to transport the product in the early planning phase,” said Mramb.