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Equinor (EQNR) Pushes Tanzania to Act On Suspended LNG Project

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Equinor ASA (EQNR - Free Report) along with Royal Dutch Shell Plc (RDS.A - Free Report) appealed to the Tanzania government to take initiative for the proposed liquefied natural gas (“LNG”) project. Notably, the project involves the shipment of the country’s rich natural gas resources to a liquefaction plant in Lindi.

In January 2021, Equinor signed a memorandum of understanding with Shell to collaborate on the liquefaction project in Lindi. Considering the benefits of collaborative work, both companies decided to execute the project as the country is emerging as a leading natural gas producer in East Africa. Notably, operator Equinor has a 65% participating interest in the project, while Exxon Mobil Corporation (XOM - Free Report) holds the rest.

Equinor has been seeking to develop the LNG plant in the southern part of the country for several years. However, the Tanzania government suspended the $30 billion project at the end of 2019 for reviewing the country's production sharing agreement (“PSA”) regime ordered by the then president John Magufuli.

Equinor, as operator of Block 2, made large gas discoveries off the Tanzania coast with partner Exxon. Equinor discovered more than 20 trillion cubic feet (Tcf) of natural gas in the block. Shell also made significant gas discoveries and owns nearly 16 Tcf of gas in Block 1 and 4 offshore Tanzania.

In January 2021, Equinor announced the write-down of the Tanzania LNG project, which amounted to $982 million. Both companies recognize the difficulties arising from the current global market dynamics and strongly believe that a collaborative approach is a correct response. Notably, it will create positive synergies and economies of scale, while significantly reducing costs and time to provide advantages to the economy and people of Tanzania.

Company Profile

Headquartered in Stavanger, Norway, Equinor is one of the leading integrated energy companies in the world.

Zacks Rank & Other Stock to Consider

Equinor currently has a Zack Rank #2 (Buy).

Another top-ranked player in the energy space is Diamondback Energy, Inc. (FANG - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Diamondback’s earnings for 2021 are expected to rise 17% year over year.

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