Tanzania is moving closer to finalising terms for a $42bn liquefied natural gas (LNG) project at Likong’o in Lindi, with a deal expected before the end of 2025, the state-owned Daily News reported.

The development has been under negotiation for more than a decade and is intended to anchor one of the largest energy investments in Africa. The plan envisages output of up to 10mn tonnes of LNG annually, drawing on offshore reserves operated by Shell (UK, Blocks 1 & 4) and Equinor (Norway, Block 2).

Block 2 has more than 20 trillion cubic feet (tcf) of recoverable gas (566bn cubic metres, bcm), making it central to the planned LNG export scheme. ExxonMobil (US) bought into the block in 2010, partnering with Statoil (now Equinor). While ExxonMobil retains a minority stake, it has shown little active engagement in the project’s progress.

Construction is expected to follow the signing of a host government agreement, though a final investment decision (FID) has been repeatedly delayed since talks first began in 2014. A framework agreement was signed in 2022, but financing and regulatory details remain outstanding.

Officials link the LNG project to broader infrastructure ambitions in Tanzania’s south, including a proposed extension of the 1,000 km Mtwara–Mbambabay–Mchuchuma/Liganga Standard Gauge Railway (SGR), facilitating mineral transport and access to regional markets in Malawi, Zambia, and the Democratic Republic of the Congo (DRC).

Tanzania’s recoverable gas resources are estimated at 57 tcf, or 1.61 trillion cubic metres (tcm), most offshore, giving it potential to emerge as a regional LNG hub. The International Energy Agency (IEA) projects global LNG demand will rise by more than 25% between 2022 and 2030, driven by Asia and Europe’s energy diversification. Yet international operators have adopted a cautious stance, balancing Tanzania’s potential with concerns over costs, regulation and market timing.

In parallel, the government has relaunched its fifth oil and gas licensing round, offering 26 blocks — 23 offshore and three in Lake Tanganyika. Officials say the tenders reflect a long-term strategy to expand exploration and attract foreign investment, even as the flagship LNG project awaits concrete progress toward final approval.

Tanzania is also finalising a $3bn joint venture with Shudao Investment Group Company Ltd. (SDIG), a Chinese state-owned enterprise, to implement long-awaited Mchuchuma coal and Liganga iron ore projects, Daily News reported in September.

The projects include a 600 MW coal-fired power plant at Mchuchuma, a 2.9mn tonnes/year iron ore mine and 1mn tonnes/year steel plant at Liganga, a 220 kV transmission line, and a connecting road.

Along with the LNG project at Likong’o in Lindi, the Mchuchuma and Liganga projects are central to Tanzania’s Vision 2050 industrialisation goals, aiming to develop energy and raw material supply chains that support local manufacturing and regional trade.