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Shell and Equinor sign Tanzania deal

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Norway-based Equinor and UK-based Shell have moved a $30 billion LNG project in Tanzania a step closer by signing an outline agreement with the country’s government.

Tanzania has an estimated 1,630 billion cubic metres in natural gas reserves off its coastline, and the deal marks a significant milestone in being able to export some of this to the world. In the agreed framework, a final decision on the investment should be made by 2025 about whether a plant for liquefied natural gas will be constructed in Lindi on the southern coast of Tanzania, with this expected to become operational in 2029 or 2030.

At a signing ceremony in the country’s capital, January Makamba, Tanzania’s energy minister said:

“We have never reached this stage of natural gas development in the history of our country. This project will significantly change our economy. Tanzania’s geographical positioning makes it easy to transport the natural gas to other countries, especially Asian (ones), which are looking for new sources of energy.”

Tanzania lies on Africa’s east coast, so exports by LNG tankers could travel easily to Asian countries, many of which will be transitioning away from using coal to generate power and towards relatively cleaner natural gas. Shell, which also makes industrial lubricant products, says the country has sufficient gas reserves to meet its own current and future energy needs while also exporting to the global LNG market.

Samia Suluhu Hassan, Tanzania’s president, also welcomed the new agreement but pointed out that much work still needed to be done to make the project a reality.

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