Oil & Gas

Tanzania is pushing to conclude a decade-long negotiation for its 42 billion US dollar Liquefied Natural Gas (LNG) project led by Shell and Equinor, targeting a Final Investment Decision (FID) by the end of this year. If completed, the project could generate 3.5 billion US dollars in annual export revenue, equivalent to nearly 6 per cent of GDP. Yet global competition is tightening as Mozambique, Namibia and Qatar advance faster with their own LNG megaprojects, raising the cost of delays for Tanzania.

With an estimated 57 trillion cubic feet of recoverable natural gas, Tanzania plans to integrate offshore Blocks 1, 2 and 4 into a single onshore liquefaction complex at Lindi. Economies of scale and shared infrastructure make the project commercially sound, but financing depth and fiscal predictability remain major concerns. Global LNG demand is projected to rise through 2030, but investors are increasingly prioritizing speed, low-cost structures and stable long-term terms.

The Host Government Agreement (HGA) will determine the project’s fate, as investors demand predictable fiscal, legal and arbitration frameworks for the next 20–30 years. Without watertight stabilization terms, borrowing costs could rise above 10 per cent, rendering Lindi financially unviable even with strong LNG prices. Tanzania must also navigate a hostile credit environment where global interest rates, Eurobond spreads and political-risk premiums directly influence project funding.

If executed successfully, the Lindi LNG project could transform Tanzania’s economy through export earnings, industrial growth and domestic gas utilization. Integrated value chains such as gas-to-power, fertiliser production and clean cooking solutions would turn LNG from a revenue source into a national development engine. But failure to deliver would entrench current-account deficits, weaken credit ratings and erode investor confidence in Tanzania’s long-term energy reliability.