A long-delayed wager nears the finish line
Tanzania is preparing to conclude one of the largest energy investments ever contemplated in sub-Saharan Africa. A proposed $42 billion liquefied natural gas project, stalled for years by regulatory uncertainty and shifting commercial terms, is again moving toward agreement as the government seeks to unlock offshore gas reserves and reposition the country as a regional energy hub.
The planned LNG terminal would anchor development of deepwater discoveries off the southern coast. If finalised, construction could begin later this decade, with exports expected in the early 2030s. For Tanzania, the prize is scale. Few investments in its history rival the promise of this project in terms of foreign capital, infrastructure and export earnings.
Capital, credibility and the state
The consortium behind the effort includes Shell and Equinor, alongside partners working with the state-owned Tanzania Petroleum Development Corporation. Together they aim to commercialise more than 47 trillion cubic feet of offshore gas, placing Tanzania among Africa’s most significant reserve holders.
For the government, credibility is as important as capital. Previous negotiations collapsed amid disputes over fiscal terms and investor protections. This time officials insist that host government agreements and legal frameworks are nearing completion. Investors will judge the claim by whether Tanzania can maintain regulatory discipline over the long horizons LNG projects require.
Development ambitions and regional calculus
Gas offers Tanzania a route to diversification. Export revenues could strengthen public finances and provide foreign exchange. Domestically, gas could support power generation, fertiliser production and energy-intensive manufacturing. Regionally, Tanzania hopes to complement Mozambique’s gas exports and establish itself as a stable supplier within East Africa.
Such ambitions are not unique. Across the continent, governments are pressing natural gas as a development accelerant, arguing that industrialisation and electrification require reliable baseload power before renewables can fully take over.
Climate pressure at home
Tanzania’s bet on gas unfolds against an intensifying climate backdrop. The country is already experiencing more frequent droughts, erratic rainfall and flooding that threaten agriculture, hydropower and food security. Lake levels that underpin hydroelectric output have become increasingly volatile, exposing the limits of reliance on a single clean energy source.
These pressures sharpen the government’s argument that gas is not merely an export commodity but a stabilising input for domestic energy systems. Officials frame LNG revenues as a means to finance climate adaptation and resilience while using gas at home to backstop renewable generation during dry seasons and peak demand.
Integrating gas with clean energy
The central question is whether Tanzania can align gas development with a credible clean energy pathway. The government has signalled plans to expand solar, wind and geothermal capacity, using gas-fired power as a balancing tool rather than a permanent substitute. In theory, this hybrid approach could reduce reliance on biomass, cut local pollution and improve grid reliability.
Sceptics note that such integration requires disciplined planning and reinvestment. Without clear rules, gas revenues risk entrenching fossil dependence rather than underwriting a transition. With them, Tanzania could present a model in which hydrocarbons finance the shift to a cleaner system rather than delay it.
A familiar African test
If the deal is sealed, Tanzania will join a growing list of African states betting that natural gas can be a bridge to prosperity rather than a trap. The geology is generous and the market opportunity remains. The harder task will be governance. Extracting gas is straightforward. Converting it into durable growth, climate resilience and a credible clean energy future is not.
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