Producers, Tanzania conclude PSA talks surrounding LNG plant

Negotiations on key agreements between Equinor ASA, Shell PLC, ExxonMobil Corp., and the Tanzanian government regarding gas supplies and production sharing for a 10-15 million tonne/year LNG plant in the country have concluded, according to Equinor. Documents comprising a host government agreement and production sharing agreement are now subject to final reviews and approvals before their expected signing in the weeks ahead.

The end of negotiations “paves the way for the series of milestones that need to follow to realize this fantastic LNG opportunity for the country and the world,” Unni M.S. Fjær, managing director, Equinor Tanzania said. Next steps include detailed engineering and design, according to a statement by Jared Kuehl, vice-president Tanzania and country chair at Shell.

PT Medco Internasional Tbk, Pavilion Energy Pte. Ltd., and Tanzania Petroleum Development Corp. were also party to the negotiations. Equinor, Shell, and Tanzania earlier this year completed negotiations regarding the plant, setting the stage for the recent production sharing talks (OGJ Online, Mar. 8, 2023).

The $42-billion plant would be built in Lindi on the Tanzanian coast and supplied with natural gas from three offshore blocks. Equinor operates Block 2 northeast of Lindi, with total in-place volumes of roughly 22 tcf and ExxonMobil also holding a stake. Blocks 1 and 4, operated by Shell, hold an estimated combined total of 16 tcf of recoverable gas.