Equinor Says Tanzania LNG Gains Appeal as Hormuz Closure Cuts Gulf Supply
The Strait of Hormuz shutdown has improved the commercial case for Tanzania's long-stalled $42 billion LNG project, Equinor said, as Asian buyers reassess Gulf supply security.
Equinor said on Tuesday (2026-08-25) that the prolonged closure of the Strait of Hormuz had materially improved the commercial case for developing Tanzania's long-stalled $42 billion liquefied natural gas project. A senior executive argued that the US-Israeli conflict with Iran had dismantled the assumption that Qatar and other Gulf producers represent the most reliable suppliers of oil and gas — a premise that had shaped Asian LNG procurement for years.5,4
For years the project sat on hold, stymied by development cost, host government negotiations and uncertain demand. What changed is the supply context. Asian buyers that built procurement strategies around Gulf LNG now face a strait that is effectively closed, with no short-term fix in sight. Tanzania, whose coast sits entirely outside the Hormuz corridor, suddenly looks different on a supply map.4
Equinor and Shell are joint operators of the project. The relevant blocks hold 47.13 trillion cubic feet of natural gas reserves, with 16 trillion cubic feet already confirmed in discovered blocks. Still, no final investment decision has been announced, and the $42 billion development cost places the project among the most capital-intensive LNG developments globally.5,4
A gas analyst told Montel on Thursday (2026-05-21) that the Hormuz closure had exposed a specific weakness in LNG's supply flexibility argument. Unlike oil, which has partial pipeline alternatives from the Gulf, LNG has none. When Hormuz closes, Gulf LNG simply stops moving. That constraint has no near-term engineering solution, and it makes geography the defining variable in long-term supply planning.1
JKM, the Asian LNG benchmark, was at $23.17/MMBtu at last close, with Gulf supply severely curtailed. Tanzania's export route would run around Africa's Cape of Good Hope, longer and more expensive per cargo than Hormuz-dependent routes, but insulated from the current disruption. For Asian utilities weighing spot exposure against long-term supply security, that geography carries weight in procurement decisions.4,1
The shift toward non-Hormuz supply is visible elsewhere. S&P Global reported a direct increase in US LNG investment tied to the Iran conflict, according to July 15 (2026-07-15) reporting, as developers and buyers sought supply that does not require Gulf passage. Tanzania offers Asian buyers a similar form of geographic diversification, via the African coast rather than the US Gulf.2
Saudi Aramco raised output by more than 1 million b/d to 8.2 million b/d in July, but only an incremental 200,000 b/d reached export markets as Bab el-Mandeb disruptions forced Riyadh to divert barrels into domestic storage at their highest level in years. ICE Brent crude front-month stood at $88.10 per barrel in the latest available data.3
But Tanzania LNG has been delayed long enough that a senior executive calling the project "more attractive" marks a signal, not a commitment. There is no publicly disclosed timeline for a final investment decision. Equinor and Shell would need anchor offtake agreements from creditworthy Asian utilities before any project finance structure could hold, and those utilities are themselves caught between government mandates to diversify supply and the higher delivered cost of non-Hormuz LNG.5,4
The duration of the Hormuz closure is what Tanzania's near-term prospects depend on. JKM above $20/MMBtu and persistent Gulf supply cuts make the project's delivered economics more defensible. If the conflict de-escalates and the strait reopens, the spot market case for committing $42 billion to Cape-of-Good-Hope freight rates weakens quickly. Equinor has not said when it might move toward a final investment decision.5,4,1