Government and investors set to conclude LNG negotiations next month.

Government and investors set to conclude LNG negotiations next month.

Anticipated developments in Tanzania’s liquefied natural gas (LNG) sector are on the horizon as the government and international investors aim to finalize agreements for an LNG plant next month.

Following ongoing negotiations between Tanzania and major global oil companies, Mr. Charles Sangweni, the director general of the Petroleum Upstream Regulatory Authority (PURA), revealed that the scrutinized agreements are expected to be reviewed by the end of February. After this review, the documents will be submitted to the Attorney General’s Office (AG) for thorough examination.

Mr. Sangweni shared that once vetted by the Attorney General, the draft host government agreement (HGA) will be presented to the cabinet for approval before the final signing. “We expect to finalize the negotiations by the end of February before submitting them to the AG,” he stated.

Mr. Michael Minja, the commissioner for oil and gas at the Ministry of Energy, added that following the initial HGA negotiations, both the government and international energy companies have submitted the drafts to higher authorities for further reviews. He emphasized the eagerness of all parties to reach a signed HGA and amended production sharing agreements.

In June 2022, President Samia Suluhu Hassan witnessed the signing of the preliminary agreement for the HGA of the LNG project, involving the Tanzanian government, Shell, and Equinor as main partners. President Hassan emphasized the project’s significance, describing it as “massive, strategic, and special,” with the potential to bring capital and revenue to the country.

President Hassan emphasized the importance of benefiting residents in the Lindi and Mtwara regions initially, while also focusing on building capacity for Tanzanians to actively participate in the project. She underscored the need for discussions, preparation, and implementation to contribute to the capacity building of Tanzanians in the sector.

In the financial landscape, Fitch, a global rating agency, recently affirmed Tanzania’s B+ stable outlook, citing stronger growth among other factors. Fitch projects real GDP growth to increase to 5.0 percent in 2023 and 5.5 percent in 2024, with the development of offshore gas fields and LNG production expected to contribute to the GDP in the long term.

The LNG project, valued at $30 billion (Sh70 trillion), is set to be implemented in the Likong’o area of the Lindi region.