The short-term gas sales agreement that also includes Tanzania Petroleum Development Corporation (TPDC) was signed late last month with the first supply delivered a day before Christmas.
PAET said in a statement yesterday that the new contract involves immediate supply of gas to Tanesco of up to 35 million standard cubic feet per day ("MMscf/d"). According to it, the additional fuel will allow the power utility to generate more electricity to meet growing demand in the economy.
“These additional volumes are being processed and transported through TPDC’s National Natural Gas Infrastructure (“NNGI”) and will allow Tanesco to generate increased and more stable power to meet emerging demand,” the subsidiary of Orca Exploration Group Inc of Canada said.
PanAfrican Energy Tanzania is the operator of the Songo Songo gas wells and gas processing plant on behalf of Songas Ltd, the owner of the infrastructure. With the fifth government’s industrialization agenda gaining steam and the economy maintaining robust growth, power demand has been up prompting more generation.
Annual growth in Tanzania’s energy demand is estimated to average between seven and nine per cent. Over the coming years, peak electrical demand is forecast to increase by about 100 MWs per annum, which presents enormous business opportunities for clean energy suppliers such as PAET who are committed towards powering Tanzania’s development and supporting the government’s industrialization drive.
According to the statement, the first gas flowed through the NNGI on December 24 and production averaged 20 MMscf/d in the first ten days of operation. PAET said total additional gas sales, including those through the Songas gas processing and transportation system averaged 56 MMscf/d over the same period.
“This compares to an average for the third quarter of 44 MMscf/d. The agreement provides a mechanism for the parties to agree to one-month extensions for a maximum term of six months and is expected to be superseded by a long-term agreement,” reads the statement.
PAET is supplying these additional volumes from its existing wells. Two wells, SS-11 and SS12, are connected to the NNGI and SS-10 will be connected if required to meet demand. PAET is currently in the process of installing a refrigeration package in the Songas processing facility to ensure that gas can continue to be processed at the plant’s capacity. It is expected that this will be operational by mid-2019.
Commenting on the development, David Roberts, Managing Director of PAET, said the three entities have focused their efforts to ensure the timely availability of Songo Songo natural gas to meet Tanzania’s growing electricity and industrial demand. He added that signing of the new agreement is a clear demonstration of the company’s cooperation with its stakeholders and its commitment to meet the country’s energy needs.
“The supply of these additional volumes has been made possible by the Songo Songo field development programme completed by the company in 2016, and the construction of the extensive gas processing and pipeline infrastructure by TPDC and the Government of Tanzania that was commissioned in the same year,” Roberts noted.
“PAET looks forward to continued cooperation with all parties to ensure that Songo Songo natural gas continues to be an affordable and reliable part of the future energy mix in Tanzania.”