Equinor Books $982mn Tanzania LNG Write-Down
Norwegian state oil producer Equinor has written $982mn of value off its books after concluding that its Tanzania LNG (TLNG) project is uncompetitive, the company said on January 29.
Equinor has been working in Tanzania since 2007, when it signed a production-sharing agreement to explore the offshore Block 2. It operates the project with a 65% interest, while ExxonMobil has 35%. Equinor began drilling in 2011 and to date has found 20 trillion ft3 (566bn m3) of gas in place.
The company had plans to use these resources to underpin 7.5mn metric ton/year of LNG exports. But the project has been held up for years by regulatory delays and the wrangling between the government and Equinor over investment terms.
"While progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet," Equinor said. "The TLNG project has an anticipated breakeven price well above the portfolio average for Equinor and is, at this time, not competitive within this portfolio."
The charge will be included in Equinor's fourth-quarter results. The company said it would continue talks with the Tanzanian government in the hope of working out commercial, fiscal and legal terms that might make the project viable.