Tanzania has taken a decisive step toward reshaping the energy future of East Africa. Backed by an alliance of global oil and gas giants including Shell, ExxonMobil, Equinor, and Ophir Energy, the country has signed a Host Government Agreement (HGA) to advance its long-anticipated $30 billion Liquefied Natural Gas (LNG) project. The initiative, now in active pre-development, is one of the largest of its kind in Africa—and could transform Tanzania into a strategic regional energy hub.
The project is expected to break ground in 2025, following the successful completion of engineering design and a final investment decision. Anchored on the southern coast, the LNG development will tap into the country’s estimated 60 trillion cubic feet (TCF) of natural gas reserves, with the goal of exporting to fast-growing Asian markets, where demand continues to surge.
At the signing ceremony, President Samia Suluhu Hassan described the project as a cornerstone of Tanzania’s long-term economic transformation. “This is not just about gas revenue,” she said. “It’s about becoming a connected, competitive player on the global energy map. We want this investment to uplift local communities and catalyze broader development.”
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Indeed, the government is positioning the LNG deal among its top three national investments, alongside the Julius Nyerere Hydropower Station and the Standard Gauge Railway. However, what makes the LNG venture unique, according to President Samia, is the depth of both its financial scale and potential for local benefit. She called on implementing partners to integrate community empowerment mechanisms directly into the project.
The scale of the initiative reflects Tanzania’s rising profile in the global gas economy. According to Statista, Tanzania is now among the top ten countries in LNG export capacity. The country’s proximity to high-value markets in Asia—where over 70% of new gas demand is concentrated—gives it a logistical edge over other producers on the continent.
Energy Minister January Makamba reinforced this point, noting that just 12 of Tanzania’s 34 gas blocks are active, leaving a large portion of the sector still unexplored. In the 2022/23 fiscal year, the government aims to expand exploration efforts across 70% of that remaining area. Such moves are designed to boost investor confidence and accelerate the country’s shift into a fully-fledged gas economy.
ExxonMobil, through its Tanzanian subsidiary, currently holds a 35% stake in the deepwater Block 2 prospect. Shell, which took over BG Group assets in 2016, has completed over 22 exploratory and appraisal wells in Tanzania, achieving a 90% success rate. Together, these companies have already discovered an estimated 16 TCF of recoverable gas and invested more than $2.5 billion in upstream development.
Yet, the road to this point has not been without challenges. In 2021, Equinor wrote down nearly $1 billion of its Tanzanian LNG holdings, citing concerns about project viability and negotiations. Since then, however, diplomatic and commercial momentum has rebuilt. The April 2025 HGA now defines the legal, fiscal, and commercial terms for the onshore portion of the project, while production-sharing agreements govern offshore extraction.
For Tanzania, the project holds both promise and pressure. If managed inclusively and transparently, it could deliver billions in revenue through LNG sales, taxes, royalties, and dividends—funds that could underwrite national infrastructure, education, and climate adaptation. A recent estimate places potential market value of Tanzania’s gas exports at $4.3 billion, based on 2021 pricing.
However, questions remain about how this fossil fuel-heavy development aligns with global climate commitments and the just energy transition agenda. While gas is often positioned as a cleaner “bridge” fuel, its long-term environmental implications—especially in ecologically sensitive coastal zones—cannot be overlooked.
As Tanzania prepares to host the 4th Tanzania Energy Congress in August 2025, much of the regional and global energy community will be watching. The LNG project represents not just an economic inflection point for Tanzania, but a test case for how African nations can balance extractive energy development with long-term sustainability, local benefit, and climate responsibility.
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