Tanzania expects to sign an agreement before June for its long-delayed $42 billion liquefied natural gas project, with production expected to begin in about eight years, a senior government minister said on Monday.
Equinor and Shell are joint operators of the large-scale gas development, which is expected to unlock about 47.13 trillion cubic feet of natural gas.
Other partners include Exxon Mobil, Pavilion Energy, Medco Energi, and Tanzania’s state-owned oil company, TPDC.
According to Reuters, progress on the project had been halted after the government proposed changes to a financial agreement reached in 2023.
Together with similar developments in neighbouring Mozambique, the project could help position East Africa as a new LNG export hub supplying Asian markets.
“We have basically concluded the commercial discussions. We are now only discussing the legal framework of this agreement,” said Kitila Mkumbo, Tanzania’s minister of state in the president’s office for planning and investment, during a briefing in London.
Mkumbo said a tailored legal framework was necessary because the LNG project represents the largest investment in Tanzania’s history.
“The deal is done and we expect this to be signed before June,” he said, adding that the project is expected to generate more than 100,000 jobs.
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He also said President Samia Suluhu Hassan has directed the central bank to sell part of its gold reserves to help fund infrastructure development.
“We need cash. We have a lot of infrastructure projects that are going on and they need funding, so they have been instructed to sell part of it so that we get money for the infrastructure,” Mkumbo said.
His comments came as gold prices climbed to record levels above $5,100 per ounce on Monday, driven by investor demand for safe-haven assets amid global political tensions.
Mkumbo’s remarks also follow decisions by several bilateral partners to reassess financial support for Tanzania after unrest linked to last year’s election, which led to the country’s most serious political crisis in decades.
President Hassan was declared the landslide winner after her two main challengers were disqualified from the race.
The main opposition party, CHADEMA, along with some human rights groups, has said security forces killed more than 1,000 people during the unrest. The government has disputed that figure but has not provided an alternative estimate.
In response to the events, international partners, mainly European countries, withheld between $2 billion and $3 billion from Tanzania’s roughly $10 billion development budget, including concessional loans and other forms of budget support, Mkumbo said.
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Image Credit: Reuters
