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African Countries are Already Booking Stakes in Tanzania’s $42B LNG Project

African Countries are Already Booking Stakes in Tanzania’s $42B LNG Project

  • Tanzania’s liquefied natural gas (LNG) project cost rises to $42 billion, surpassing initial estimates and making it the largest energy project in eastern and southern Africa. 
  • The project aims to develop Tanzania’s 57.54 trillion cubic feet of discovered gas by 2028, with participation from Shell and Equinor as lead partners, positioning Tanzania as the region’s LNG giant. 
  • Despite the increased cost and extended timeline, neighboring countries like Uganda and Kenya have already signed agreements to purchase Tanzania’s LNG, showcasing the potential for regional energy cooperation and utilization of clean energy resources.

As it prepares to sign the host government agreement and begin the front-end engineering design of what will become the largest energy project in eastern and southern Africa, Tanzania estimates that the cost of developing its liquefied natural gas (LNG) project is $42 billion after the most recent technical analysis.

The offshore project’s initial projected cost was $30 billion, however some current industry sources put the figure at $40 billion.

“There is a lot of analysis ongoing. The recent technical analysis shows that offshore drilling and piping will push the project to $42 billion,” Tanzania’s Permanent Secretary in the Ministry of Energy Felchesmi Jossen Mramb, said.

In Kampala, Tanzania pitched an additional 26 exploration areas, both onshore and offshore, that will be up for grabs by year’s end in the nation’s first licensing round since 2013, in order to find more hydrocarbons. He was speaking on the sidelines of the 10th East African Petroleum Conference and Exhibition.

Tanzania plans to develop its 57.54 trillion cubic feet of gas that has already been discovered by 2028, with participation from the Tanzania Petroleum Development Corporation (TPDC) and international oil companies Shell Plc and Equinor ASA as the lead partners. This will make Tanzania the region’s LNG giant.

Energy Minister January Makamba stated in March that the project’s negotiations had come to an end and that contracts were now being drafted, including a Host Government Agreement (HGA) and one regarding the linking of Blocks 1, 2, and 4. Blocks 1 and 4 are operated by Shell, and Block 2 by the Norwegian company Equinor.

After the HGA is signed, the project will begin the pre-front end engineering design (FEED) feasibility studies, which will take two years, according to Shigela Malosha, director of contracting and licensing at the Petroleum Upstream Regulatory Authority. This will result in the FEED, which will take a further three years.

Mr. Malosha warns that the project’s final investment decision is anticipated in 2028 rather than 2025 as had been anticipated, with construction anticipated to take three and a half to five years, depending on the technology utilized.

“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,” Mr Mramba told the EAPCE delegates.

Davis Chirchir, the cabinet secretary for energy in Kenya, says that the regional energy plan should include locked-in agreements that let nations benefit from their neighbors’ clean energy initiatives, such as Tanzania’s natural gas, Uganda’s hydropower, and Kenya’s geothermal resources.

810 km of a natural gas network are scheduled for development in Tanzania. 2,000 houses in the nation are already connected to natural gas infrastructure, and Songo Songo and Mnazi Bay power facilities use onshore natural gas to generate 62% of the nation’s installed 1100 MW of energy.

Only 650 million standard cubic feet per day of its 57.54 trillion cubic feet of natural gas reserves are generated daily.

Business Insider

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