After Hormuz, the case for Tanzanian gas has never been stronger

The Strait of Hormuz crisis has triggered the largest disruption to the physical global energy- market disruption in history. With the Persian Gulf largely cut off and regional bypass routes, including Saudi Arabia’s East–West pipeline, disabled by strikes, the world’s energy architecture is changing rapidly and chaotically. As oil prices rise and the crisis shows no sign of resolution, countries are searching for new energy sources of energy outside the Middle East.

The statute, tied to the long-stalled Likong'o-Mchinga project, would unlock 47.13 trillion cubic feet of gas discovered off Tanzania's southern coast more than a decade ago. Equinor and Shell are developing the project with ExxonMobil, Pavilion Energy, Medco Energi and the state-owned TPDC.

Although negotiations over the LNG project have long been under way, Equinor recorded a write-down of roughly $1 billion under the initial agreement after prolonged discussions with the government faltered over fiscal, regulatory and commercial terms.

Drawing up a legislative framework is therefore an important step towards a more durable investment regime. A host government agreement primarily binds President Samia Suluhu Hassan’s administration, whereas a statute passed by the Tanzanian Parliament becomes national law and binds the state regardless of who governs next. This would give investors greater protection against future regulatory change.

Tanzania could benefit substantially from the law’s implementation. The government projects that the deal would create more than 100,000 direct and indirect jobs, while Equinor’s modelling indicates that the project could increase the country’s annual GDP by about 7%.

In May 2025, Tanzania launched its fifth oil and gas licensing round, the first in more than a decade. Twenty-six exploration blocks were put up for auction to attract fresh investment into the country's hydrocarbons sector. Read alongside the proposed statute, the round signals to international investors that Tanzania is open to upstream investment under modernised, formalised terms. The 2017 Petroleum Regulations serve as a baseline, leaving the new law to determine how much gas will be reserved for the domestic market and on what terms.

The strongest argument for immediate action, however, comes from outside Tanzania. Iranian missile strikes on Qatar's Ras Laffan complex in March damaged two liquefaction trains, cutting the country's LNG export capacity by 17%. Repairs are expected to take between three and five years.

Roughly a fifth of global LNG trade normally passes through the Strait of Hormuz, most of it originating at Qatar’s Ras Laffan complex. The strikes there knocked out around a fifth of Qatar’s export capacity. Force majeure measures have already been extended beyond their original deadline to October, and even if America’s standoff with Iran is resolved, the region is unlikely to return to the status quo ante bellum any time soon.

Equinor argues that these developments strengthen Tanzania's case as a risk-diversification supplier for Asia. Its LNG exports would not eliminate Asian dependence on seaborne gas: the continent receives more than 80% of Qatar's LNG exports. However, Tanzanian supply could reduce reliance on Gulf-origin cargoes and broaden competition for Asian demand. Its value lies in being an Indian Ocean source whose cargoes need not pass through Hormuz, Suez, Panama or Malacca.

With its offshore reserves, a proposed export terminal and proximity to gas fields in Kenya and, across the border, Mozambique, Tanzania is positioned to become both a supplier and a regional aggregation point for the next phase of Asian gas trade.

The development timeline is also favourable. Front-end engineering design typically takes two to three years, which would put a realistic final investment decision in 2028–29. The first cargoes would then follow in the early 2030s.

LNG buyers contract years ahead of delivery, so the window for Tanzania to compete for 2030s offtake is open now. Nor is Tanzania making this case alone. Mozambique's TotalEnergies-led LNG project fully restarted operations in January 2026 after force majeure was lifted, with first LNG expected in 2029. Senegal and Mauritania are already producing from their own offshore fields. Together, these projects are strengthening Africa's credibility as a gas-producing region.

Passing the proposed law would remove a major obstacle to the LNG deal, but the coming months will be decisive. Investors will look closely at the bill's publication, the proposed domestic gas reservation requirement and any local insurance requirement. Tanzania must settle these points promptly and credibly if it is to compete for long-term Asian offtake and turn its offshore reserves into a source of national growth and global energy diversification.