Tanzania must make big concessions to revive zombie LNG project
Worsening situation in Mozambique should give investors pause for thought
Tanzania is trying to revive long-lost plans to build an enormous $30 billion onshore liquefied natural gas export project, which has been stuck for many years by disagreement over the fiscal terms for exploiting Tanzania’s vast gas wealth. Foreign investors are also anxious about ploughing big sums into a country beset by corruption and authoritarianism. Now, a worsening conflict with Islamist militias in neighbouring Mozambique poses a further complication to developing a capital-intensive gas liquefaction project in Tanzania.
The boat has almost certainly already sailed on Tanzania’s LNG dreams. Equinor, which operates the gas-rich offshore Block 2 with 65% interest alongside 35% partner ExxonMobil, wrote off the carrying value of its interest in the Tanzania LNG project by $982 million in January.
“[O]verall project economics have not yet improved sufficiently to justify keeping it on the balance sheet,” the Norwegian state oil compan…