LNG project: It’s back to the negotiating table

The process requires submission to the Attorney General once negotiations are finalised and if the AG is satisfied with the proposed document, the draft HGA is forwarded to the Cabinet for approval before signing.

Attorney General Eliezer Feleshi declined to comment on the matter when The Citizen contacted him.

Read: Why final LNG negotiations have yet to be concluded

However, Petroleum Upstream Regulatory Authority (Pura) director general Charles Sangweni, who is also the chairman of the government negotiation team, told The Citizen that there were issues raised by the AG, but declined to mention them.

According to him, the queries require a meeting with the investors for further negotiations.

“The Attorney General has raised queries that need to be addressed before going forward. We are planning another meeting with the investors to iron out what was questioned by the AG before we embark on the next steps,” Mr Sangweni said.

The government and investors, led by Shell and Equinor concluded talks on several aspects of the HGA about a year ago, covering areas such as the production-sharing agreements and regulatory framework provisions for the development of the LNG complex.

Sources said the government was still weighing a proposal by the companies that proceeds from the project be banked by foreign financial institutions.

The firms also requested withholding tax exemptions and that foreign insurance companies be involved in the deal.

‘Slower than expected’

Equinor Tanzania head of communications Genevieve Kasanga told The Citizen that Equinor and Shell, on behalf of the Tanzania LNG partners, initialled fully termed agreements with the Tanzanian government in May 2023.

“Since then, the progress has indeed been slower than we expected,” she said. “As the world’s energy system is slowly transitioning from oil and gas, we hope to advance Tanzania's LNG an attractive project in many respects on time.”

Ms Kasanga added that the company remain committed to concluding the next step by signing and implementing the agreements soon.

“Today, we regard Tanzania LNG as an investable and low-carbon project.”

According to her, if LNG is realised, the project has the potential to transform Tanzania’s economy, benefiting the country with revenue, jobs, and domestic natural gas. It will also position Tanzania as a key supplier of low-carbon LNG on a global stage, she said.

The US Ambassador to Tanzania, Mr Michael Battle, told The Citizen on the sidelines of a bilateral commercial dialogue this week that investors were trying to negotiate the deal in such a way that it benefits both Tanzania and the investors.

According to him, last week, the investors and the government met for two days in Arusha.

“As a follow-up, I met with the investors on Friday, and they said they would meet again to negotiate the issues that were raised (by the AG) to satisfy both the Tanzanian side and the investors,” Mr Battle said.

According to him, the deal is uniquely significant for Tanzania because it will not only satisfy the country but also supply LNG regionally and internationally.

Some of the investors in the LNG project include the US, Indonesia, and Norway, among others.

The LNG project which will be implemented in Likong’o, Lindi Region, has been off and on for some time now due to issues that need to be resolved.

President Samia Suluhu Hassan was quoted in March this year saying some countries have shown interest in working with Tanzania on gas issues, highlighting the importance to examine the laws and guidelines that bind the government to welcome the private sector and make amendments.

Read: US cautions Tanzania on LNG project delays

In June 2022, President Hassan witnessed the signing of the preliminary agreement for the project HGA signed between the government on one side and Shell and Equinor companies which are the main partners in the implementation of the project.