Tanzania: Panafrican Energy Plans $80m Investment in Gas Production

By The Citizen Reporter

Dar es Salaam — PanAfrican Energy Tanzania (PAET) says it plans to spend $80 million investment on activities aimed at sustaining production of natural gas, whose demand is forecast to increase in

Tanzania.

Natural gas is used for generating electricity and factories in Tanzania are increasingly switching to the use of natural gas.

The company said in its operational update yesterday that the money will be spent on compression, workovers of natural gas wells and debottlenecking through to October 2026, when the existing Songo Songo licence expires.

"The company plans to carry out a number of challenging technical projects to meet demand and increase access to the benefits that Tanzania's indigenous natural gas resources bring to the nation," stated the firm's managing director Andy Hanna.

PAET expects increases in demand in 2020, across the power and industrial sectors, and potentially through expansion of its ongoing CNG to vehicles project. Although the timing is uncertain, additional power generation is expected to be installed at Kinyerezi, commencing in the third quarter of 2020, and building to 185MW of combined cycle generation capacity by the end of the year. About 150MW of this will be gas fired generation.

The government is currently reviewing the terms of all the existing Production Sharing Agreements (PSA) and it may lead to revisions to the PSA and changes to the economic terms.

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However, PAET says it is keen to extend the PSA beyond 2026 and "to continue to support Tanzania's economic and industrial development."

In the fourth quarter of 2019, PAET produced an annual average of 63.1 MMscfd compared with 39.9 MMscfd) of 2018. By 2026, 762 Bcf of natural gas is expected to have been produced from the Songo Songo field. "A decision on the timing and scope of the workovers is subject to Board approvals and agreement with Songas, and will likely be taken by the end of second quarter 2020," read the statement.