Equinor Hopeful for Tanzania Outcome
Norwegian producer Equinor, the operator of Tanzania's deep-sea natural gas Block 2, is confident that the government will extend the company's rights to the asset despite its failure to secure an extension recently, it told NGW.
The state-run company is the operator with a 65% working interest in the block offshore Tanzania; its partner is US major ExxonMobil with 35% stake. In June 2018, the partners discovered more gas to take the total amount of the recoverable resources to 23 trillion ft3. Shell, the operator in another partnership that includes UK's Ophir Energy and Singapore's Pavilion, has about 16 trillion ft3 of gas, also offshore Tanzania.
It emerged on January 15, 2019 that Equinor and Shell had lost almost all their rights to the assets after they failed to secure government extensions to them but a spokesperson of the former is optimistic that the company's rights will be restored. "Equinor has received necessary assurances that this licence will be renewed in due course," it told NGW.
Equinor has been in Tanzania since 2007 when the company signed a production sharing agreement for Block 2 with the Tanzania Petroleum Development Corporation (TPDC), the national oil company. TPDC has the right to participate with a 10% interest.
The Equinor/Shell consortium plans to invest $30bn in building a liquefaction and export terminal at Lindi, a south eastern coastal town. Progress towards the signing of a host government agreement (HGA) has been slow, in part because of the president, John Magufuli, has demanded a higher share of the proceeds from the resource. However, in December 2018, Magufuli gave government negotiators the go-ahead to resume negotiations on the HGA.
"It is important to Equinor that the Tanzanian gas resources are developed in a way that benefits all parties, and most of all Tanzania," said Equinor. "Together with our partner ExxonMobil in Block 2 and with TPDC as the licence holder, we see the need to agree on a commercial contract for the LNG plant in Lindi. This will allow Tanzania to benefit from the value of the resources in a timely manner. We have progressed our planning to a point where this is the next logical step and we are very happy that the government of Tanzania agrees with this."