The government has said the Host Government Agreement (HGA) negotiations for the $30 billion Liquefied Natural Gas (LNG) project that stalled since year 2017 have resumed.
The discussions to construct the plant in Lindi Region stalled in year 2017 following the government’s decision to review the Production Sharing Agreements contracts with investors for better deals. But, on 31st December 2021, the Tanzania Petroleum Development Corporation (TPDC) director of Exploration, Development and Production, Mr Kelvin Komba, told The Citizen that the negotiation between the 2 started on November 8, 2021 as planned.
“The discussion between the government and the international firm Equinor ASA on the HGA are progressing well with expectations that they will be concluded early this year ,” he said.
Unlike in the past when the investor opted to separately hold the negotiation, this time both sides are engaged in the negotiations.
However, he declined to mention the exact anticipated date for the conclusion, noting that the current focus was on the progress of the negotiations.
October last year, Energy Minister January Makamba took it on Twitter saying he had held a meeting with a team from Equinor ASA led by Mr Paul McCafferty, Senior Vice President for exploration and production. “We both expressed optimism about the investability of the Tanzania LNG project,” he said.
During their conversation, the duo scheduled November 8, 2021 as the date for resuming negotiations after 4 years of standstill.
The HGA negotiations have been on and off, after they initially stopped in 2017 due to technicalities and resumed in 2018 only to stall again.
Initially in year 2017, they stopped because the oil and gas companies could not agree on modalities together and therefore negotiations had to be stopped until it was agreed that they be undertaken separately.
However, the talks resumed in April, 2018 but encountered a hitch after the PSAs were taken to the Attorney General for review.
TPDC had been optimistic that the negotiations would be completed by September 2019 and they would move to another stage known as the Preparation for Front End Engineering Design (pre-FEED).
They had explained that the HGA key terms of negotiations were running on schedule and hoped to wrap up as planned and that the next stage would be the pre-FEED.
According to TPDC, the pre- FEED is actually the design of the project, including matters that would be involved in the construction of the LNG project.
The partners in the project include Shell Tanzania and its partners Ophir Energy and Pavilion Energy. Others are Equinor, Block 2 operator together with its partner ExxonMobil.
When contacted in October, 2021, Equinor Vice President and Country Manager Unni Merethe Fjaer said the company was pleased with the government commitment towards the upcoming negotiations and the goal of realizing the LNG project in Tanzania.
He said the Tanzania LNG investors have been engaging with the government, and continue to be pleased about the partnership, cooperation and opportunities associated with the largest potential investment in the country’s history.
“We had a good meeting with the Energy Minister, Mr Makamba, an opportunity which we appreciate. We remain committed and as the minister has informed the date for the start of negotiations, the team from the investors for Blocks 1, 2 and 4, Equinor and Shell are ready to meet with the government team to progress with the negotiations,” he said.
Total Oil reached a $20 billion Final Investment Decision in 2019 and was working out to deliver LNG in 2024.
With about 57.7tcf of natural gas reserves, Tanzania also offers endless opportunities for investors in the oil and natural gas sectors.