Equinor ASA: Impairment at Tanzania LNG Project
January 29 2021 - 2:00AM
Equinor (OSE: EQNR, NYSE: EQNR) has decided to write
down the book value of its Tanzania LNG project (TLNG) on the
company’s balance sheet by 982million USD. This will be reflected
in adjusted earnings for EPI division in fourth quarter 2020
results to be reported on 10 February 2021.
While progress has been made in recent years on the commercial
framework for TLNG, overall project economics have not yet improved
sufficiently to justify keeping it on the balance sheet. The TLNG
project has an anticipated breakeven price well above the portfolio
average for Equinor and is, at this time, not competitive within
this portfolio. Equinor will continue to engage with the Government
of Tanzania in negotiations on a commercial, fiscal and legal
framework that may provide a viable business case for TLNG in the
future.
Equinor maintains an attractive portfolio of project development
opportunities in oil and gas as well as renewables. This portfolio
requires strict prioritization, ensuring capital is allocated
towards projects yielding the most competitive returns. As shown at
the Capital Markets Update in February last year, Equinor’s oil and
gas projects with expected start-up by 2026 have an average
breakeven below $35/bbl based on today’s estimates. Similar for
non-sanctioned oil and gas projects with expected start-up within
this decade, the average breakeven is below $40/bbl.
Equinor has been present in Tanzania since 2007 when the company
signed a Production Sharing Agreement (PSA) with the Tanzania
Petroleum Development Corporation (TPDC). Equinor is the operator
with a 65% participating interest, along with ExxonMobil’s working
interest of 35%. TPDC has the right to participate with a 10%
interest. Equinor made nine gas discoveries in Block 2 offshore
Tanzania with estimated volumes of 20 Tcf of gas in place.
Contacts
Investor relations:Peter HuttonSenior vice
president Investor Relations+44 7881 918 792 (mobile)
Media:Erik HaalandManager Media Relations+47
954 21 770 (mobile)
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
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