Keypoints:
- Commercial and fiscal talks largely completed
- Legal agreements remain the critical hurdle
- Global LNG disruption raises project’s importance
TANZANIA has moved its long-delayed $42bn liquefied natural gas project another step closer to a decision, with most commercial and fiscal negotiations now completed and legal teams working through the agreements needed to take it forward.
It is an important development for one of Africa’s largest proposed energy investments, but not yet a green light to build. The outstanding legal framework must still be completed, approved by government and taken through the necessary parliamentary process before the companies involved can make a final investment decision, or FID.
Legal talks move to centre stage
Tanzania Petroleum Development Corporation Managing Director Mussa Makame gave the latest update during a briefing with journalists in Dodoma on September 21.
According to Tanzanian publication The Chanzo, Makame said negotiations over the project’s commercial structure, size, taxation and revenue sharing had largely been completed during the 2025/26 financial year.
‘We completed a large part of the negotiations,’ he said.
The focus has now shifted to the legal framework. Makame said negotiating teams were meeting in Arusha to work through the laws and agreements that will govern the development.
Once that work is finished, the documents will move through government approval and the required legislative process in parliament.
That represents real progress, although Tanzania has been close to an agreement before.
Earlier this year, officials were aiming to complete the outstanding deal by June. Africa Briefing reported that commercial talks had largely been settled, with legal documentation emerging as the main remaining hurdle.
June came and went without a signing.
The latest announcement therefore matters less because of another timetable and more because TPDC says the difficult bargaining over money, taxation and revenue sharing is substantially behind it.
Huge gas resources await development
Tanzania has spent more than a decade trying to find a commercially workable route to developing the vast gas discoveries lying off its southern coast.
The proposed LNG development would bring gas from deep-water Blocks 1, 2 and 4 to an onshore processing and export facility in the Lindi region.
TPDC describes the Tanzania LNG project as an attempt to monetise the offshore discoveries through a land-based LNG export plant and open Tanzania to the global LNG market.
Equinor has operated Block 2 since 2007 alongside ExxonMobil. Equinor says its Tanzania exploration programme has involved 15 wells resulting in nine discoveries containing more than 20 trillion cubic feet of gas in place.
Shell leads Blocks 1 and 4. Taken together, the discoveries linked to the wider LNG development amount to about 47 trillion cubic feet, according to figures cited by the project partners.
The long road towards development appeared to shorten in 2022 when Tanzania signed an LNG framework agreement with Equinor and Shell.
But the framework did not settle everything. Negotiations over the fiscal regime, legal protections, commercial terms and Tanzania’s share of the project continued.
That history explains why the legal stage now under way is so important.
Global gas market has changed
Tanzania is also returning to the LNG conversation at a very different moment for global energy markets.
Disruption around the Strait of Hormuz has exposed the risks facing countries that depend heavily on gas shipped out of the Gulf.
In August, Reuters reported that Equinor saw growing strategic value in Tanzania’s LNG project, particularly for Asian buyers seeking to diversify supply risk.
That pressure has intensified.
LNG buyers and sellers are looking more widely for alternative suppliers and shipping routes, with Reuters reporting growing efforts to diversify global LNG supply.
Geography works in Tanzania’s favour. LNG shipped from its Indian Ocean coast to Asian markets would not have to pass through the Strait of Hormuz.
That alone will not make the project commercially viable. Costs, contractual terms and expected returns will ultimately determine whether the companies invest.
But the strategic argument for opening another major source of LNG outside the Gulf has become considerably stronger.
Tanzania wants gains at home
The government is also trying to ensure that a project of this size leaves more behind than export receipts.
Makame said the Prime Minister’s Office has established a team to draw up a local-content strategy identifying where Tanzanian businesses, workers and professionals could participate.
That will be an important part of the political and economic debate around the development.
At $42bn, the project would be enormous by Tanzanian standards. Questions over jobs, skills, procurement, domestic gas supply and the share of value retained locally will therefore matter almost as much as the headline investment figure.
The LNG plans also fit into Tanzania’s wider push to increase its importance in East African energy.
In August, TPDC joined Uganda National Oil Company and Vitol Bahrain in plans for a regional energy hub at Tanga. As Africa Briefing reported on the proposed $20bn Tanga energy hub, the project could eventually include refining, storage, logistics and regional fuel distribution.
Together, the projects point to an ambition that goes beyond simply exporting raw resources.
The real test comes next
For Tanzania’s LNG ambitions, however, one hurdle towers above the rest.
The legal framework has to be completed and approved. After that, Shell, Equinor and their partners must decide whether the numbers justify committing tens of billions of dollars.
That decision will separate years of negotiations from an actual project.
Tanzania has come closer before, which is why the latest announcement should be seen as significant progress rather than the end of the process.
The next decisive headline will not be that another round of talks has finished.
It will be that the agreements have been signed — and the investors have decided to build.
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Tanzania set to sign $42bn LNG project
Tanzania signs LNG framework agreement with Equinor and Shell
