Tanzania’s Govt keeping tabs with LNG plant

THE government is still keeping tabs with the proposed construction of a long-awaited Liquefied Natural Gas (LNG) plant in Lindi Region.

At the moment, key talks pertaining to the massive project had been finalised between Baker Botts LLP, a United Kingdom- based transaction advisor and the Tanzanian government.

Minister for Energy, January Makamba told reporters here that the two parties were now in the final stages of drafting the final Host-Government Agreement (HGA) in making the 40 billion US dollars (about 92tri/-) gas scheme a reality, and ultimately propel the country’s economic development.

“There’s no rush in entering into such massive undertakings as it involves voluminous contracts and agreements, which have a lot of technicalities,” said the minister, while fielding questions from reporters on the sidelines of the Ministry of Energy Workers’ Council held here yesterday.

Such an agreement will see the Baker Botts LLP assist the government of Tanzania on developing the LNG project including Host-Government Agreement (HGA), which is a treaty between a foreign investor and a local government.

“The project is set to put Tanzania on the global map because some of the gas will be used for local industries, while a huge chunk will be for export, thus guaranteeing the government hefty revenues,” the Minister explained.

The project seeks to feed gas from offshore blocks 1, 2 and 4 to a processing facility in Lindi, which will greatly improve other services in the oil and gas sector and assure the government of local content.

These blocks house about 35 trillion cubic feet of recoverable gas, split about evenly between the two operators’ assets.

More than 20 companies had tendered their interests through Tanzania Petroleum Development Corporation (TPDC) to assist the government as far as the envisioned project was concerned, but only a few made the cut.

Royal Dutch Shell and Norwegian company Equinor have been planning to build an LNG terminal in Lindi since 2014.

However, progress was undermined by revised terms introduced by Tanzania’s 2015 Petroleum Act, the 2016 Finance Act and a series of natural resources laws.

The project is said to have many benefits, from the initial inflow of foreign investment and the employment generated, to solving the country’s energy challenges.

Tanzania is set to start reaping economic and social benefits from the project in the year 2025 when the Final Investment Decision (FID) is expected to be signed.

Recently, the Director General of Petroleum Upstream Regulatory Authority (PURA), Eng Charles Sangweni, told ‘Daily News’ in a telephone interview that the government is currently drafting the final HGA.

The initial HGA was signed between the government of Tanzania and investors involved in the mega project in June, last year, during a ceremony which was witnessed by President Samia Suluhu Hassan at Chamwino State House in Dodoma. The companies involved in the LNG project are Shell and Equinor ASA.

“We are now finalising the process of drafting the final HGA, these are legal documents and hence there is a need to have clear interpretation of all provisions of the agreement.

“If all goes as planned, we expect to sign the final HGA soon to pave the way for signing of the final investment decision by 2025,” Eng Sangweni explained.

Once the FID is inked in 2025, construction work for the project is expected to kick off in the same year after which, production and exports of natural gas to global markets will start by 2030.

In another development, Mr Makamba said the government was determined to make power outages, a thing of the past, come 2025.

The minister disclosed that the government was restoring electricity systems and infrastructure, hinting that it would take some time before the power crisis is resolved for good.

“The relief which we are all witnessing at the moment is temporary, it is my hope that we would have put this issue to rest towards the end of 2024,” he hinted.

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