Tanzania's Latest Power Plant Starts Up
Tanzania's newest gas-fired power plant has started up near the commercial capital, Dar es Salaam, adding 167 MW to the national grid.
The US$344mn, 167 MW Kinyerezi 2 facility, which is owned by the state's Tanzania Electricity Supply Company (Tanesco), was fully commissioned on Tuesday, April 3, three years after the earlier 150 MW Kinyerezi 1 came online. Prior to April 3, around 45% of the country's 1,400 MW installed generation capacity was gas-fired.
Tanesco managing director Tito Mwinuka said all the six turbines at Kinyerezi 2 started producing 45 days ahead of schedule. Its first two turbines were already running in January, according to one upstream gas producer. The Japanese contractor Sumitomo Corporation built Kinyerezi 2 and, of the $344mn invested in the project, $282mn came as a soft loan to the Tanzanian government from Sumitomo Mitsui Banking Corp and the Japan Bank for International Cooperation, while Tanzania paid $51.6mn upfront.
Tanzania is seeking more investment to boost capacity at Kinyerezi 1 and 2, and to launch construction of eventual Kinyerezi 3 and 4 units, capacity of which would be 600MW and 450MW respectively if built.
The east African country has 57 trillion ft3 of mainly offshore natural gas. However, the only producing fields - all onshore southern Tanzania or in shallow waters - account for only a fraction of that overall resource base. Most of the current output is being used to produce electricity.
Shell (with partners Ophir and Pavilion) and Statoil (with ExxonMobil) are mulling a $30bn onshore LNG export project at Lindi in southern Tanzania on the Indian Ocean coast to which they would pipe their offshore gas, but it could be the 2020s before an investment decision is taken by either operator, with investors jittery about the government's recent run-ins with the mining companies in Tanzania.
Orca gives Swala more time to complete deal
One of the companies producing near the capital, Orca Exploration, meanwhile announced April 3 it has agreed to extend until May 11 2018 (from March 28) the second and third closing dates for the sale of its 40% stake in its local gas producing subsidiary PanAfrican Energy Corp (PAEM) to Tanzania-listed Swala Oil and Gas Tanzania for $130mn. Mauritius-based PAEM, through its subsidiary PAET, owns Tanzania's first gas field Songo Songo, which has produced for over a decade in shallow waters under a production sharing agreement with state-owned Tanzania Petroleum Development Corporation (TPDC).
The proposed sale, announced in January, was put on hold a month later after TPDC raised issues with PAET's tax obligations and contested its valuation of capital recovery for its upstream investments.
On April 4, Orca said its 'additional gas production' in 2017, believed to mean net to Orca, was 41.6mn ft3/d, down 7% from 2016, due primarily to the reduced nominations of natural gas volumes by Tanesco.
It added that its 2017 independent reserves evaluation which show a 12% decrease in total proved reserves for additional gas to 307bn ft3 (8.7bn m3), from 347bn ft3 in 2016 and a decrease in total proved plus probable reserves of 6% to 380bn ft3 (10.8bn m3), from 405bn ft3 in 2016.
"The decrease is a consequence of 2017 additional gas production of 15.2bn ft3 and lower anticipated growth in power sales to the company. The net present value of the estimated future cash flows from the 2P [total proved plus probable reserves] reserves at a 10% discount rate decreased by 10% to $326.1mn, from $363mn in the previous year. The decrease is a result of the lower forecast sales to the power sector at lower average prices," said Toronto-listed Orca.