Tanzania's long-delayed $42 billion liquefied natural gas (LNG) project in Lindi has reached a critical stage, with negotiations with investors now complete. The project, which has been years in the making, requires a clear legal and fiscal framework before construction can begin. According to Tanzania Petroleum Development Corporation (TPDC) Managing Director Mussa Makame, the commercial negotiations have been concluded, and what remains is the legal work, including the Host Government Agreements and legislation.
The shift from commercial negotiations to legal work is significant, as it paves the way for the project's construction phase. The LNG project will require a robust legal framework to ensure that the investment is secure and that Tanzanians can participate in the multibillion-dollar project. To this end, the Prime Minister's Office has established a dedicated team to prepare a Local Content Strategy and Plan for the project. The strategy aims to increase Tanzanian participation in employment, skills development, and business opportunities.
The Local Content Strategy and Plan will be crucial in determining how much of the project's economic impact remains in Tanzania. For a project of this scale, local content is likely to extend beyond direct employment to include construction services, transport, catering, engineering, maintenance, and other supply-chain businesses. This will enable Tanzanians to benefit from the project beyond just employment opportunities. The project's development comes as Tanzania seeks to increase domestic gas production and expand access to natural gas for industries, households, and vehicles.
Tanzania currently manages production from the Songo Songo and Mnazi Bay blocks, which together produce about 170 million cubic feet of natural gas a day. About 85 percent of the output is used for electricity generation, highlighting the importance of gas to Tanzania's power supply. At Mnazi Bay, TPDC has completed two development wells that have added 65 million cubic feet per day of production capacity. The expansion is expected to raise production from about 110 million cubic feet per day to at least 150 million cubic feet per day once supporting gas infrastructure is upgraded.
TPDC is also working to extend gas beyond areas already served by pipelines. During the 2025/26 financial year, about 1,000 households in Pwani and Lindi were connected to natural gas networks, alongside two industrial plants and three private CNG stations. The corporation plans to use compressed natural gas (CNG) as the main distribution option within a 500-kilometre radius of existing gas infrastructure, while Mini-LNG technology is expected to be deployed beyond that range within the next 1.5 to two years.
The LNG project is part of a broader push by TPDC to position Tanzania as a regional energy hub. The corporation is pursuing gas export links with Kenya, Uganda, and Zambia, while discussions are also underway on a gas connection with Mozambique. At the same time, Tanzania is studying new refined-product pipelines to Zambia and Uganda and conducting a feasibility study for a domestic oil refinery, including crude and refined-product storage facilities and distribution pipelines.
The project's progress is a significant step towards realizing Tanzania's energy ambitions. However, the immediate challenge is now legal rather than commercial: translating the negotiated terms into agreements and legislation that can withstand government scrutiny and win parliamentary approval. With the project's legal framework in place, Tanzania can move closer to harnessing its natural gas resources and becoming a major player in the regional energy market.
Key points
- The project's development is expected to have a significant impact on Tanzania's economy and energy sector.
- The Local Content Strategy and Plan will be crucial in determining how much of the project's economic impact remains in Tanzania.
- The project is part of a broader push by TPDC to position Tanzania as a regional energy hub.
