Tanzania close to finalising $42 billion LNG deal

Tanzania expects to finalise agreements on major investment projects in the coming months, including a $42 billion liquefied natural gas (LNG) development that officials hope will support industrialisation, Finance Minister Khamis Mussa Omar has told Reuters. The LNG project, led by Equinor and Shell, is part of efforts to establish East Africa as a major energy hub. It is expected to facilitate the development of 47.13 trillion cubic feet of natural gas reserves. Other partners include ExxonMobil, Pavilion Energy, Medco Energi and the state-owned Tanzania Petroleum Development Corporation (TPDC). Officials had expected the LNG agreement to be signed before June. “It's almost there,” Mr Omar said. Equinor and Shell did not respond to requests for comment. Although most of the LNG is expected to be exported, part of the production will be reserved for the domestic market. Critical minerals projects Mr Omar said Tanzania was also close to reaching agreements on two critical minerals projects, but declined to provide details. He said US investors, in particular, were interested in energy and critical minerals. The government aims to nearly double electricity generation capacity to 8,000 megawatts by 2030, while increasing the share of energy from sources it classifies as clean—including hydropower, solar, wind and natural gas—to about 75 percent. Mr Omar said Tanzania was seeking more international investment in projects capable of generating revenue and financing their own operations. The government has yet to decide whether to issue an international bond but is working to attract foreign investors to its domestic debt market. In July, Tanzania widened foreign investors’ access to its domestic bond market. It launched a sovereign yield curve in August and introduced reforms aimed at boosting corporate debt issuance. However, the government is still assessing the risks of greater foreign participation, Mr Omar said, adding that the Bank of Tanzania was studying the experiences of other African countries. The move reflects a broader trend among frontier markets seeking to attract global investors to local-currency debt. Tanzania currently finances about two-thirds of its Sh62.3 trillion ($23.7 billion) budget through domestic revenue. Official development assistance, which once accounted for 40 percent of the budget, has declined alongside a global reduction in aid and now represents a “very, very negligible” share, Mr Omar said. The government is also assessing whether to seek a new International Monetary Fund (IMF) lending programme, with a decision expected by June, he said. Tanzania’s previous $1.7 billion IMF programme, comprising an Extended Credit Facility and a climate-focused Resilience and Sustainability Facility, ended in July.