Prime
Government, investors to finalise negotiations on LNG next month
What you need to know:
- PURA director general says the agreements will be reviewed by the end of February this year before being submitted to the Attorney General’s Office (AG) for vetting.
Dar es Salaam. The government expects to finalise agreements with international companies for the development of a proposed liquefied natural gas (LNG) plant next month after scrutinising the drafted documents.
Negotiations have been ongoing between Tanzania and global oil majors, but the Petroleum Upstream Regulatory Authority’s (PURA) director general, Mr Charles Sangweni, said yesterday that the agreements will be reviewed by the end of February this year before being submitted to the Attorney General’s Office (AG) for vetting.
Mr Sangweni told The Citizen that after vetting by the Attorney General (AG), the draft host government agreement (HGA) will be submitted to the cabinet for approval before signing. “We expect to finalise the negotiations by the end of February before submitting them to the AG,” he said.
For his part, the commissioner for oil and gas at the Ministry of Energy, Mr Michael Minja, said that after finalising the initial HGA negotiations, both the government and the international energy companies submitted the drafts to the respective higher authorities for further reviews. “The government negotiation team and the governing boards of respective investors issued their opinions and now both the government and the energy firms will meet to agree and finalise before further action,” he said.
“Every party is eager to ensure we arrive at the end with a signed HGA and amended production sharing agreements,” he added.
In June 2022, President Samia Suluhu Hassan witnessed the signing of the preliminary agreement for the HGA of the LNG project.
The agreement was signed between the Tanzanian government, Shell and Equinor, who are the main partners in the implementation of the project.
President Hassan said then that it is “massive, strategic, and special” as it brings capital and revenue to the country. “My instructions are to continue to safeguard the interests of the country in the next stages of negotiations, and it is also important to note that it is give-or-take, so both sides should embrace fluidity to achieve the intended goals,” she said.
President Hassan also stressed that the project is nationwide but should first benefit the residents of the Lindi and Mtwara regions, as well as build the capacity for Tanzanians to participate fully in the project.
“The process of discussion, preparation, and implementation of the project must lead to building the capacity of Tanzanians in this sector; our mission is that in the years to come, future generations can harvest the country’s resources more productively and more independently,” she added.
Last month, global rating agency Fitch affirmed Tanzania’s B+ stable outlook, citing stronger growth among other parameters.
Fitch expects real gross domestic product (GDP) growth to rise to 5.0 percent in 2023 and 5.5 percent in 2024, up from 4.7 percent in 2022.
In the long term, real GDP growth will benefit from the development of offshore gas fields and LNG production, Fitch said, adding that it expects LNG developments to start contributing to the GDP in 2029.
The LNG project is worth $30 billion (Sh70 trillion) and will be implemented in the Likong’o area of the Lindi region.
