Hormuz Crisis Boosts Appeal of $42-Billion Tanzania LNG

Equinor and Shell, the joint operators of a $42-billion LNG export project in Tanzania, believe the ongoing crisis in the Middle East, particularly the conflict affecting liquefied natural gas supply through the Strait of Hormuz, has made the project more appealing for development. Philippe Mathieu, Executive Vice President of Exploration & Production International at Equinor, stated that producers do not want to wait too long to introduce new LNG volumes to the market, suggesting that the current time might be opportune to advance the project.

The Hormuz crisis and the assumption that Qatar and other Gulf producers are the most reliable suppliers of oil and gas have increased the attractiveness of the Tanzania LNG project, according to Mathieu. By constructing an LNG export facility in Tanzania, which is not exposed to geopolitical challenges, producers can benefit from a more stable environment for operation.

Tanzania's government and international oil and gas majors have been in lengthy negotiations to start developing the $42-billion project. Although Equinor and Shell have made significant strides, such as buying BG Group in 2016 and acquiring two offshore blocks in Tanzania, Block 1 and Block 4, totaling 16 trillion cubic feet of natural gas, they have yet to reach definitive agreements on the project's terms and conditions.

The project, which has been in the works for a decade, holds the potential to be Tanzania's largest foreign investment.