Firms deliver gas to new pipeline at 8.4bn/- charge

By The guardian reporter

Kinyerezi I 150MW Power Plant, which was inaugurated by retired president Jakaya Kikwete on October 13, 2015. The plant uses gas produced by Maurel et Prom and Wentworth Resources in the Mnzai Bay concession. (File photo)

 The main supplier to the new Mtwara-Dar es Salaam transnational pipeline has received the first payment of US$3.8 million (about 8.4bn/-) for gas delivery, which was used to generate electricity at power plants in the city.

 

Maurel et Prom and Wentworth Resources, which own and run two producing natural gas fields in the Mnazi Bay area, said the payment was made early this month.

 

The payment was for supply of over 30 million cubic feet per day (mmscf/day) gas, which was delivered last month. In the sales agreement signed with the government in September 2014, the price of the gas was set at US$3 per million metric British thermal unit (mmBTU), about US$3.07 per thousand cubic feet, rising in line with the US CPI industrial index.

   

“An average of 33 mmscf/day was delivered to the new pipeline during October 2015 and a gross payment of US$3.8 million has been received relating to the October 2015 gas deliveries,” Wentworth Resources said in a statement.

 

The company, which is listed on the Alternative Investment Market of the London Stock and the Oslo Stock Exchange, said the supplied gas was used at the Kinyerezi I, Ubungo-II and Symbian power plants in Dar es Salaam.

 

French oil producer Maurel et Prom is the operator of the Mnazi Bay licence with a 48.06 per cent production interest, while Wentworth has a 31.94 per cent production stake. The remaining 20 per cent production slice in the concession belongs to Tanzania Petroleum Development Corporation (TPDC).

 

"We are pleased with the progress that has been made by the Government during the start-up and commissioning phases and we are delighted about how well the new pipeline system is working,” Geoff Bury, the Managing Director of Wentworth noted in the statement.

 

“We, along with our joint venture partners, feel confident that our existing wells will be capable of delivering the initial target production volumes of 80mmscf/d while we expect the Government owned power plants to be ready to take the full amount of these volumes during the last quarter of 2015,” he added.

 

According to him, the Mnazi Bay Concession gas plays a vital role in reducing the cost and improving the reliability of power generation in Tanzania. The licence has five existing gas wells of which three have been successfully brought on-stream.

 

The fourth well is expected to be tied in next month and the fifth in the first quarter of 2016.

 

In August, operator Maurel & Prom opened the first two wells of the Mnazi Bay gas field for supplying gas to the Madimba processing centre, the entry point of the 532-km Mtwara-Dar es Salaam gas pipeline. The processing plant is operated by Tanzania Gas Supply Company (GASCO), a subsidiary of TPDC.

Wentworth said production volumes are expected to almost triple to 80 mmscf/d in the current quarter.

 

“Further to the announcement on August 20, 2015, that gas deliveries to the new transnational pipeline had commenced; the gas production facilities at Madimba, the Mtwara to Dar es Salaam pipeline and the Kinyerezi Gas Receiving Facility have now been fully commissioned and are operational,” the statement reads in part.

 

“Mnazi Bay gas is currently being used to generate power in Dar es Salaam at the existing Ubungo-II and Symbian power plants, as well as at the new Kinyerezi-I power plant. Production volumes into the pipeline are currently at 33 mmscf/day from three wells on a restricted flow basis, and are expected to reach 80 mmscf/day once all of the generators at these three power plants are fully operational, which is expected in fourth quarter of 2015,” it adds.

 

“Three of the five existing gas wells at Mnazi Bay have been successfully brought on-stream with well performance in line with expectations.  The fourth well is expected to be tied in during November 2015 and the fifth well is expected to be tied in and ready to produce into the new pipeline in first quarter of 2016.”

 

The gas supply deal was signed in September 2014 seeking to help double the country's power generation capacity to 3,000 megawatts by 2016. Bob McBean, Wentworth Resources’ executive chairman, said the gas supply agreement was a significant advancement in the development of the gas industry and laid the foundation for the future domestic gas development in Tanzania. 

 

The US$1.33 billion project to pipe natural gas to Dar es Salaam from Mtwara was launched early last month by retired president Kikwete. 

 

The pipeline and gas processing plants, largely financed by a Chinese loan, are part of the national strategic plan to add about 2,000 megawatts of new gas-fired electricity generating power by 2018 to increase the country’s generating capacity to 10,000 MW by 2025.

 

The strategy also targets to use coal reserves and renewable resources such as wind and geothermal in meeting the national power target.

Tanzania estimates to have about 55 trillion cubic feet (tcf) of recoverable natural gas reserves off the southern coastline. With gas, the government expects to save over US$1 billion a year in oil imports for electricity generation.