Kenya will be the first destination for Tanzania’s natural gas exports.
The Artumas Group Incorporation, a Mtwara-based gas exploring company, has been given the go ahead by the government to export to Kenya.
A source at the Ministry of Energy and Minerals told The EastAfrican that gas exports to Kenya will depend on whether they can satisfy local demand. The plant has a capacity for 300MW.
The company recently finalised plans to use compressed natural gas for motor vehicles and domestic purposes.
When contacted for comment by The EastAfrican, president and chief executive officer of Artumas Stephen W. Mason, said that he was not in a position to comment on the company’s gas export plans to Kenya.
The Norwegian-listed oil and gas firm discovered a gas deposit at Mnazi Bay in Mtwara Region, which has about two trillion cubic feet of proven gas deposit.
Early last year, the Tanzania government effectively licensed Artumas, which is involved in the exploration of gas to generate electricity to be supplied to Lindi and Mtwara, two of the country’s underdeveloped regions.
According to a statement from Artumas, the Tanzania government has given approval to the firm to finalise negotiations with the relevant parties for the export of compressed natural gas to off-take clients in Mombasa, Kenya.
It further said that the approval allows Artumas to move forward to conclude the relevant Project Agreements, including long term gas sales agreements with the off-take customers and transportation services agreements with the compressed natural gas shipper.
In the statement, Mr Mason said that conclusion of these commercial agreements would underpin the current planning activity in support of commencements of the drilling programme in the fourth quarter of 2008.
He said: “During the past year, Artumas has worked in close co-operation and collaboration with its working interest partner, Tanzania Petroleum Development Corporation and the government of Tanzania to determine the optimal use of the large gas resource base located in the Tanzania part of the Ruvuma Basin.
The commercialisation strategy involves balancing Tanzania domestic requirements with high-value export opportunities. The approval for export of compressed natural gas reflects the vision and foresight of the government of Tanzania and is further evidence of the confidence held by the government in the abilities of Artumas to execute on its recommendations.”
The gas exploration at Mnazi Bay became the second facility to produce electricity from locally-sourced gas. The first was gas from Songo Songo Island, which is transported to Dar es Salaam via a pipeline to Ubungo Power Plant from where Songas generates power for sale to Tanesco.
Tanzania has also discovered further gas deposits at Mkuranga, slightly over 40km from Dar es Salaam.
The director general of the Energy and Water Utilities Regulatory Authority Haruna Masebu last year said that the Mnazi Bay gas-to-electricity project will generate power that is sufficient for small and medium industries in the Lindi and Mtwara regions.