By Business Insider Reporter
The government is renewing its push to unlock one of Africa’s largest undeveloped gas resources, with the government targeting mid-2026 to finalise a long-delayed US$42 billion liquefied natural gas (LNG) investment agreement.
If successful, the deal would mark a turning point for the country’s energy sector – and potentially its wider economy – after more than a decade of stalled negotiations.
Speaking on the sidelines of India Energy Week in Goa, Deputy Minister for Energy Salome Makamba said the government expects to conclude negotiations for the offshore LNG project before June 2026, with production projected to begin roughly eight years later. The timeline reflects both the scale of the project and the complexity that has long surrounded its development.
The LNG venture is structured as a joint project between the state-owned Tanzania Petroleum Development Corporation (TPDC) and a consortium of international energy majors, led by Shell and Equinor as joint operators, with ExxonMobil among the partners. Once developed, the project would monetise more than 47 trillion cubic feet (tcf) of gas from Tanzania’s offshore fields, out of total estimated reserves exceeding 54 tcf.
A high-stakes bet on gas
Analysts argue that for Tanzania, the LNG project represents more than an energy investment – it is a strategic bet on gas as a driver of long-term growth, foreign exchange earnings, and industrialisation. LNG exports could transform the country into a significant global gas supplier, while supporting domestic power generation, fertiliser production, and petrochemicals.
Ms. Makamba told investors that the government is actively working to create an “enabling environment for investment,” pointing to efforts aimed at reducing risk and improving sector fundamentals. These include new seismic surveys in the Eyasi–Wembere, Lindi and Mtwara blocks, alongside investments to expand domestic gas infrastructure for industrial and household use.
Over the years, Tanzania’s gas potential has attracted major international players, including BG Group (now part of Shell), Petrobras, and Ophir Energy. Yet despite early discoveries and high expectations, the sector has struggled to translate resources into production at scale.
Structural challenges remain
While official optimism has grown in recent months, investors remain cautious. Tanzania’s oil and gas sector has long been weighed down by policy uncertainty, regulatory complexity, infrastructure gaps, and governance weaknesses – factors that have contributed to repeated delays of the LNG project.
Academic research and industry assessments published in recent years suggest that although Tanzania has established a solid legal framework for overseeing the sector, implementation and enforcement remain inconsistent.
A 2025 sector analysis noted that regulatory overlaps and discretionary decision-making continue to undermine investor confidence, slowing approvals and increasing project risk.
Local content requirements – intended to ensure Tanzanians benefit from large-scale energy investments – have also proven difficult to execute. While the policy intent is widely supported, studies show a persistent gap between ambition and reality, largely due to limited domestic technical capacity, skills shortages, and regulatory bottlenecks.
For investors, the challenge is not the absence of rules, but uncertainty over how they will be applied over the life of a multi-decade project.
Reform as the deciding factor
Energy analysts argue that unlocking Tanzania’s gas potential will require more than concluding the LNG agreement. Structural reform – particularly around institutional governance – will be critical.
Among the proposals frequently raised by experts are strengthening regulatory independence, improving transparency in contract management, and redefining the role of the national oil company to reduce conflicts between commercial and policy objectives. A shift toward a more market-oriented framework, they argue, would improve efficiency while maintaining state oversight.
Without these reforms, Tanzania risks repeating a familiar pattern seen in other resource-rich economies: vast reserves on paper, but limited economic transformation on the ground.
Gas vs green transition
Complicating matters further is the global energy transition. As Tanzania accelerates plans to exploit its gas resources, it is also pledging commitment to a “just and inclusive transition” toward cleaner energy sources.
Government officials argue that natural gas will serve as a transition fuel – supporting economic development while enabling investment in renewables. Critics, however, warn that large, capital-intensive LNG projects could expose the country to long-term market risks as global demand dynamics shift.
Balancing climate commitments with development priorities remains one of Tanzania’s most delicate policy challenges.
A defining moment
With negotiations entering what officials describe as a decisive phase, the coming months will test whether Tanzania can finally convert geological promise into commercial reality. For international investors, the LNG deal will serve as a litmus test of the country’s broader investment climate. If concluded on credible and transparent terms, the project could reposition Tanzania as a major player in the global gas market. Failure, however, would reinforce lingering doubts about the country’s ability to execute mega-projects – despite its undeniable resource wealth.
