Equinor ASA said Friday it would make a $982 million writedown of its Tanzania liquefied natural gas (TLNG) export project proposed for east Africa, saying it does not currently compete with other projects in the company’s portfolio.

“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,” Equinor said. 

The company added that it would continue to work with Tanzania’s government on the commercial, fiscal and legal aspects of the project. But Equinor said for now that TLNG has a projected breakeven price “well above” the average of its portfolio. The charge is to be reflected in the company’s fourth quarter earnings results.

Equinor’s oil and natural gas projects with an expected start-up by 2026 have an average breakeven of $35.00/bbl, while non-sanctioned projects with an expected start-up this decade have an average breakeven below $40.00/bbl. 

The company has worked in Tanzania since 2007 when it signed a production sharing agreement with Tanzania Petroleum Development Corp. (TPDC). Equinor started exploratory drilling in Block 2 offshore Tanzania in 2011 and has made nine gas discoveries there with estimated volumes of 20 Tcf of gas in place.

Equinor has said an LNG export project is the most viable solution to secure development of those resources and maximize their value for the country, which is strategically located to serve gas markets in Asia, Europe and South America. 

Gas in the block is spread across several reservoirs miles apart, which would require multiple production wells to extract gas and bring it ashore to facilities north of Lindi, Tanzania, via a subsea pipeline for liquefaction and domestic distribution. 

The Block 2 LNG project is expected to produce 7.5 million tons of the super-chilled fuel annually. As a mega-project, according to Equinor, it would take an investment of $20 billion. 

Equinor would be the operator with a 65% participating interest in the production sharing agreement, while ExxonMobil has a 35% working interest and TPDC has the right to participate with a 10% interest.