Tanzania is expected to sign a $42 billion deal in July to build an LNG plant, putting Mozambique under pressure



Neighboring Tanzania aims to accelerate the exploitation of natural resources, with the goal being to begin exporting the first LNG shipment within five years. The country has confirmed the conclusion of an amended production sharing agreement with the project consortium that includes Equinor ASA, Shell Plc and ExxonMobil, according to
the permanent secretary of the Ministry of Energy, Felchesmi Mramba. The government also intends to pass a bill to expedite the construction of the plant. “We want to have a special law for this project,” he said on the sidelines of an energy conference in the Kenyan capital, Nairobi. “This should pave the way for the final investment. The sooner we fulfill these two, the sooner foreign direct investment will arrive.” Tanzania expects its first LNG export within five years of the plant’s construction, said Mramba. If successful, it will likely become the second country on Africa’s east coast to export gas. Mozambique began its first shipments from a floating LNG terminal in November last year. About 10 percent of the gas to be produced will be used internally to
supply industries, Mramba said. Tanzania estimates it has recoverable natural gas reserves of more than 57 trillion cubic feet. The government is committed to accelerating the exploitation of its natural resources and plans to carry out joint oil and gas exploration with China’s Cnooc Ltd. in two offshore blocks owned by state-owned Tanzania Petroleum Development Corp. The search for hydrocarbons on the continent has been growing steadily as European countries seek to diversify their energy supplies and reduce dependence on Russian gas. Meanwhile, the Centre for Public Integrity (CIP), a
Mozambican non-governmental organization (NGO), said that Tanzania’s announcements about investments in natural gas put pressure on Mozambique, and the country should accelerate its projects without undermining principles.  “To maximize gas gains, Mozambique must move forward urgently,” because “competition with Tanzania in the sector reduces the window of time” for the country to “operationalize its projects,” reads an analysis by economist Rui Mate published by CIP. In Mozambique, of the three LNG projects in the Rovuma basin that are expected to boost the country’s economy, only the smallest – a floating platform – is operational.  “The Tanzanian gas project undoubtedly represents a competition for Mozambican projects,” notes economist Rui Mate, stressing that the sector “represents the light at the end of the tunnel for Mozambique to live, in the short term, structural transformations in economic and social terms.” The economist believes that “Tanzania’s competitiveness may stimulate the spirit of survival and the need for Mozambique to stand out in the hydrocarbon market, which could play an important role in the operationalization of projects.” In short, “the government and companies will feel pressured by the possibility of losses if there is no timely progress.” Faced with this pressure, Rui Mate identified three risks to mitigate. Firstly, it considered it necessary to improve “crucial aspects of security and human rights”, secondly, to avoid, by way of facilitation, “negotiating benefits for the State in a short-term vision” and, finally, to strengthen “levels of transparency”. (Bloomberg⁄Lusa)

Tanzania is expected to sign a $42 billion deal in July to build an LNG plant, putting Mozambique under pressure

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