Shell and Equinor have taken another step forward in their plans for Tanzania LNG and closing in on a host government agreement (HGA).

Shell’s country manager Jared Kuehl said the companies had concluded important negotiations with the government.

“Subject to successful completion of the assurance process over the coming weeks, we anticipate signing a host government agreement (HGA) that covers the onshore elements of the project, and a production sharing agreement (PSA) that oversees its upstream component,” Kuehl said.

The next steps after this would be detailed engineering design, he continued.

Equinor country manager Unni Fjaer also noted the “important milestone” in the move towards Tanzania LNG. “It paves the way for the series of milestones that need to follow to realise this fantastic LNG opportunity for the country and the world,” Fjaer said.

Also involved in the project are ExxonMobil, MedcoEnergi and Singapore’s Pavilion Energy.

Significant progress

Equinor head of Africa Nina Birgitte Koch was in Tanzania two weeks ago, holding talks with Tanzanian Energy Minister January Makamba.

Speaking at the time, she said there had been “significant progress in recent months and weeks, and I am optimistic about the future and what we can achieve together”. All the parties, she continued, are “working in good spirits to finalise the agreements”.

Equinor has a 65% stake in Block 2, while Exxon has 35%. Tanzania Petroleum Development Corp. (TPDC) has an option for a 10% stake in the licence.

Shell operates Blocks 1 and 4 with 60% stakes. Medco has 20% and Pavilion 20%.

Equinor has reported its block holds more than 20 trillion cubic feet, while Shell’s blocks have 15 tcf.

The project plan involves a liquefaction plant onshore, at Lindi. Tanzania has put the price of the project at $42 billion. The aim is to reach final investment decision (FID) in 2025.