OSLO, Nov 4 (Reuters) - Equinor could start producing liquefied natural gas (LNG) in Tanzania by the end of this decade if talks with the East African country’s government succeed, a top executive at the Norwegian company said on Thursday.
The energy company made a series of gas discoveries in Tanzania’s waters during the last decade and recently said it will revive previously stalled talks on the possible development of those reserves.
“We are cautiously optimistic and pleased by what they (Tanzania’s government) say,” Al Cook, Equinor’s head of international operations, told Reuters.
“If we are successful, we believe we could start this (LNG production) up by the end of the decade. That would be the target that we would go for,” he said.
Equinor in January wrote off the entire book value of $982 million of its portfolio in Tanzania, citing poor economics. But global LNG prices have since surged to record highs driven by strong Asian demand, making the project more attractive.
“We see rising demand for LNG from Asia as a clean alternative for coal. China during the course of (the) Covid (pandemic) added as much gas demand as the entire nation of France,” Cook said.
Equinor operates Tanzania’s Block 2, which it estimated to hold more than 20 trillion cubic feet (0.6 trillion cubic metres) of gas in place, while ExxonMobil also holds a stake.
Equinor aims to cooperate with Shell on the project, which operates Block 1 and 4 off Tanzania with some 16 trillion cubic feet in estimated recoverable gas, Cook said.
“I’m very confident that we are aligned with them and that we can move forward,” he added.
Shell’s Chief Executive Ben van Beurden spoke with Tanzania’s President Samia Suluhu Hassan about potential investments in energy projects last month, the company said in an email to Reuters, declining to elaborate.
Talks with Tanzania’s authorities are expected to focus on fiscal, legal and regulatory frameworks that could enable companies to make investments, Equinor said. (Reporting by Nerijus Adomaitis in Oslo and Shadia Nasralla in London, editing by Terje Solsvik and Susan Fenton)
Our Standards: The Thomson Reuters Trust Principles.