Tanzania expects to sign $42 billion mega LNG project before June, minister says

LONDON, Jan 26 (Reuters) - Tanzania expects to sign before June a deal for its stalled project to construct a $42 billion liquefied natural gas (LNG) plant, a senior government minister said on Monday, with production set to start in eight years’ time. Equinor (EQNR.OL) and Shell (SHEL.L) are joint operators of the mega gas project, which would unlock 47.13 trillion cubic feet of natural gas deposits, while Exxon Mobil (XOM.N) , Pavilion Energy, Medco Energi (MEDC.JK) and Tanzania’s national oil company TPDC are partners. The development was stalled by proposed government changes to a financial agreement reached in 2023. Along with ones in neighbouring Mozambique, Tanzania’s project could help establish the East Africa region as an emerging LNG export hub to Asia. “We have basically concluded the commercial discussions. We are now only discussing the legal framework of this agreement,” said Kitila Mkumbo, Tanzania’s minister of state in the president’s office for planning and investment, during a briefing in London. A specific legal framework was needed, Mkumbo said, given that at $42 billion this was the largest ever investment project for the country. “The deal is done and we expect this to be signed before June,” he said, adding the project was expected to create more than 100,000 jobs. Mkumbo also said President Samia Suluhu Hassan had instructed the central bank to sell some gold from its reserves. “We need cash. We have a lot of infrastructure projects that are going on and they need funding, so they have been instructed to sell part of it so that we get money for the infrastructure.” Gold prices marched to record levels above $5,100 on Monday, as investors sought a safe haven amid international political tension. Mkumbo’s comments come in the wake of a number of bilateral partners reviewing their financial support following unrest surrounding last year’s election, which plunged Tanzania into its biggest political crisis in decades. Hassan was declared the landslide winner of the election after her two leading challengers had been disqualified from the race. The main opposition party, CHADEMA, and some human rights activists have said security forces killed more than 1,000 people in the unrest. Hassan’s government disputes that number but has not put forward its own figure for the number of dead. International partners, mainly European nations, withheld between $2 billion to $3 billion of the country’s $10 billion development budget, including concessional loans and other budget support, in response to the events, Mkumbo said.