- Equinor ASA, formerly Statoil, of Norway has announced its decision to write off its $982 million liquefied natural gas project in Tanzania (TLNG).
- According to industry experts, Equinor’s decision to write off the value of TLNG was influenced by factors like the fall in global prices of natural gas, and the investment scenario in Tanzania.
Equinor ASA, formerly Statoil, of Norway has announced its decision to write off its $982 million liquefied natural gas project in Tanzania (TLNG). The firm’s senior vice president for investor relations Peter Hutton, in a briefing note issued to the firm’s shareholders, stated that the TLNG project with an anticipated break-even price well above portfolio average for Equinor was found to be not competitive within the portfolio. The overall economics did not improve to justify keeping it on the balance sheet and will be reflected in adjusted earnings for EPI division in fourth quarter 2020 results.
According to industry experts, Equinor’s decision to write off the value of TLNG was influenced by factors like the fall in global prices of natural gas, and the investment scenario in Tanzania pertaining to production-sharing agreements.
Mr Hutton said that Equinor will continue to negotiate with Tanzania on commercial, fiscal, and legal frameworks that may provide a viable business case for TLNG in the future. The project ran into trouble due to the delay to get approval for the building of an onshore gas processing plant and export facility to enable commercial production for exploration firms to monetise the discovery. Once the firm successfully negotiates with Tanzania to make the project economically viable, Impairment will be reversed.
Equinor has been present in Tanzania since 2007 after it signed a production sharing agreement with Tanzania Petroleum Development Corporation. Between 2010 and 2017 almost $2.1 billion was invested by the company in the exploration of offshore Block 2 in the southeastern part of Tanzania. Nine discoveries of over 566 trillion cubic liters of gas were reported from the drilling of fifteen wells.
