Hormuz Crisis Boosts Appeal of $42-Billion Tanzania LNG

Equinor sees a multi-billion LNG export project in Tanzania becoming more attractive for development amid the Middle East conflict that has crippled liquefied natural gas supply through the Strait of Hormuz, a senior executive at the Norwegian energy major said on Tuesday.

However, Equinor and its co-operator of the project, Shell, have been locked in difficult negotiations with the government and authorities in Tanzania for years and the provisional Tanzania LNG project has not advanced much this decade.

“You don’t want to wait too long to put new LNG volumes on the market, so maybe now is a good time to get on with it,” Philippe Mathieu, Executive Vice President, Exploration & Production International, at Equinor, said at an energy conference in the Norwegian city of Stavanger, as carried by Reuters.

The Hormuz crisis and the now-dead assumption that Qatar and other Gulf producers are the most reliable suppliers of oil and gas make the project in Tanzania, estimated to cost $42 billion, more attractive, the executive said.

“It means you are producing LNG in an area which is not exposed to these kinds of geopolitical challenges,” Mathieu added.

Shell and Equinor, the joint operators of the project, have been pursuing for years agreements to start developing the planned $42-billion LNG export project in Tanzania. The project for connecting natural gas discoveries offshore Tanzania with an export terminal on its coast has been a decade in the making.

But the international oil and gas majors have failed to reach so far detailed and definitive agreements with Tanzania’s government about the terms and conditions in what could be the country’s biggest-ever foreign investment.

After buying BG Group in 2016, Shell became the operator of two offshore blocks in Tanzania, Block 1 and Block 4, together with its partners Medco Energi (Ophir Energy) and Pavilion Energy. A total of 16 trillion cubic feet (Tcf) of natural gas has been discovered in the blocks.

Equinor, for its part, started exploration drilling activities in Block 2 offshore Tanzania in 2011 and has made nine discoveries with estimated volumes of more than 20 Tcf of gas in place.

By Charles Kennedy for Oilprice.com

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