Keypoints:
- Tanzania targets June signing for $42bn LNG megaproject
- Equinor and Shell lead development of offshore gas reserves
- Deal would mark Tanzania’s largest investment to date
TANZANIA expects to sign its long-awaited $42bn liquefied natural gas (LNG) export project before June, marking a decisive step toward one of the most significant energy investments in Africa.
Government officials say negotiations with international energy companies have reached the final stage, with legal documentation now the only outstanding hurdle.
The project has been delayed for more than a decade but is now back on track as the government accelerates efforts to attract long-term foreign capital into its energy sector.
If finalised, the LNG agreement would unlock Tanzania’s vast offshore gas reserves, position the country as a new exporter into global energy markets, and reshape East Africa’s role in international gas supply chains at a time of intensifying geopolitical competition for energy security.
Commercial talks concluded
Minister of State for Planning and Investment Kitila Mkumbo said the government and investors had already resolved all commercial issues tied to the project.
‘We have concluded negotiations on the commercial framework. What remains is finalising the legal text,’ Mkumbo told an investment forum in London.
He added that officials were confident the host government agreement and related contracts could be completed in time for signing before the end of June.
Energy majors lead consortium
The LNG project is being developed by a consortium led by Norway’s Equinor and UK-based Shell, which serve as joint operators.
Other partners include Exxon Mobil, Pavilion Energy, Indonesia’s Medco Energi and Tanzania’s state-owned Tanzania Petroleum Development Corporation (TPDC).
The group aims to commercialise more than 47 trillion cubic feet of natural gas discovered offshore southern Tanzania, primarily in deep-water blocks along the Indian Ocean.
Project scale and infrastructure
The proposed development includes subsea wells, offshore production facilities, pipelines and an onshore LNG plant planned near the coastal town of Lindi.
At an estimated cost of $42bn, it would represent the largest single foreign investment in Tanzania’s history and one of the biggest LNG projects on the African continent.
Officials estimate that LNG production could begin around eight years after signing, following a final investment decision and full construction.
Delays and revised fiscal terms
Negotiations over the project have stretched for years amid disputes over taxation, revenue sharing and local content requirements.
Although Tanzania and investors reached an initial agreement in 2023, the government later sought revisions aimed at increasing state revenue and strengthening domestic participation, prompting renewed talks.
Those issues have now been resolved, officials say, under President Samia Suluhu Hassan’s investment-friendly reform agenda.
Economic impact and employment
Authorities estimate the LNG project could create tens of thousands of jobs during construction and several thousand permanent roles once operational.
Beyond employment, the development is expected to generate substantial export earnings, support infrastructure expansion and strengthen Tanzania’s foreign exchange position.
Government officials describe the project as a pillar of long-term economic transformation.
East Africa’s energy race
Tanzania’s progress comes as East Africa emerges as a major frontier for global gas investment.
Mozambique has already begun LNG exports, though security challenges have slowed expansion. Analysts say Tanzania’s political stability and large reserves give it strong potential to compete for Asian LNG demand over the next decade.
Fiscal pressures acknowledged
At the same London forum, Mkumbo disclosed that President Hassan has authorised the central bank to sell a portion of Tanzania’s gold reserves to help finance priority infrastructure projects.
Despite fiscal constraints, the government maintains that LNG remains central to its growth strategy.
The story was first reported by Reuters.
