THE government of Tanzania and investors of the Liquefied Natural Gas (LNG) project in Lindi region are expected to ink the final Host Government Agreement (HGA) this month to pave the way for execution of the US 40 billion dollars (about 92tri/-), President Samia Suluhu Hassan, announced yesterday.
A Final Investment Decision (FID) for the LNG project is expected to be reached in 2025 after which production and exports of natural gas to global markets will start by 2030.
“We have had fruitful discussions with the investors and I have met some of them in separate occasions. The signing of the final agreement is crucial for the implementation of the project.
“I call upon residents in Lindi region to accord maximum cooperation to the investors to facilitate smooth implementation of the venture,” Dr Samia said yesterday, while addressing a public rally at Ilulu grounds in the region during the commemoration of World AIDS Day.
President Samia assured residents in the gas-rich region that the LNG project will play a crucial role in creating jobs and bolstering development of the region.
“The LNG project will take some time before it starts production and as such you should cooperate with the investors to enable them to undertake the project smoothly,” she appealed.
The planned signing of the HGA this month follows the initial inking of the agreement on June 11, this year, which was witnessed by President Samia at the Chamwino State House in Dodoma.
The initial HGA was signed between the government of Tanzania as well as Shell and Equinor ASA companies, who are the main partners in implementation of the project.
Other investors who are partners of the multi-million project which is one of its kind in Tanzania include ExxonMobil, and Pavilion Energy.
Speaking after signing of the initial agreement, the Minister for Energy, Mr January Makamba, said the project will change the image of the country’s economy and will be carried out in parallel with the development of infrastructure on the petroleum upstream sector to facilitate harvesting of the resource.
Minister Makamba noted that during the construction of the project which is expected to span for between four and six years, a total of 10,000 jobs are expected to be created, while 500 permanent jobs will be generated after its completion.
Speaking in exclusive interview with ‘Daily News’ recently, local analysts pointed that the signing of the final HGA is timely and worth it since the global market for natural gas is ripe.
“This is commendable and good for the economy, not only on the FDIs (Foreign Direct Investments) and employment creation, but also as a sustainable source of foreign exchange,” Alpha Capital Head of Research and Financial Analytics, Imani Muhingo told the ‘Daily News’.
Mr Muhingo said the completion of the discussion and signing of the deal is timely, adding that the “market is ripe”, especially now, when Europe hastens to untangle from Russian energy dependence.
The project was delayed by years of prolonged negotiations but gained urgency as European countries look for LNG projects that can be long-term replacements for energy supplies from Russia.
Tanzania’s natural gas reserves are estimated at 57 trillion cubic feet (tcf) with a total annual production of 110 billion cubic feet from three fields in Songo Songo Island, Mnazi Bay, and Kiliwani North.
Africa’s natural gas reserves are over 620 tcf as of last year. Tanzania, with 57.54 trillion cubic feet stands at the sixth position in the top ten countries with abundant natural gas reserves in the continent.
Meanwhile, President Samia has directed the Ministry of Natural Resources and Tourism to work with authorities in Lindi region to put in place proper land use in order to prevent encroachment by farmers and livestock keepers in areas, which are reserved for wild animals.
Dr Samia made the directives in response to concerns raised by Lindi Regional Commissioner, Ms Zainab Telack, on incidences of elephants which have been invading villages and destroying crops.
The Head of State went on and blamed human activities in reserved areas as a reason for the jumbos to move from their natural habitats to areas inhabited by human beings.