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Orca forms unit to build E.Africa gas network
Wed Jul 14, 2010 3:33pm GMT
* To expand gas pipeline in east Africa
* Orca seeking partners for expansion
By Fumbuka Ng'wanakilala
DAR ES SALAAM, July 14 (Reuters) - Toronto-listed Orca Exploration (ORCb.V) has created a new infrastructure unit to help it build a natural gas pipeline network in east Africa.
Called EastCoast Transmission and Marketing, the division will first focus on expanding the onshore pipeline carrying gas from Songo Songo off Tanzania's east coast to the commercial capital Dar es Salaam, Orca said in a statement late on Tuesday.
"Ultimately it is envisioned that the pipeline could be extended along the coast - north to Mombasa and south to Mtwara near the border with Mozambique near the Mnazi Bay gas discovery," the company said.
Orca said in April it planned to raise daily natural gas production at the Songo Songo field -- with 490.2 billion cubic feet of proven and probable gas deposits -- by 60 percent by the end of 2012 to 144 million cubic feet. [ID:nLDE63L1I5]
The Mnazi Bay gas deposit lies on a block held by Oslo-listed Artumas Group Inc (AGIC.OL). Artumas estimates the gas potential at 3 trillion cubic feet.
At present natural gas from Mnazi Bay is used to generate about 12 MW of power, which is distributed in Mtwara.
Artumas Tanzania has put on hold plans for a 300 MW power plant due to the global economic crisis, which made it harder to access financing.
"The markets for natural gas are opening up in East Africa and there is significant potential demand from the power sector. However infrastructure remains a bottleneck that urgently needs to be addressed," said David Lyons, Orca's chairman and CEO in the statement.
Orca said it was discussing with potential pipeline expansion partners and was keen to have a significant East Africa finance component as part of the infrastructure project.
It added that cash flow from its operations in Tanzania and anticipated funding from the company's recently announced rights issue will also help finance the infrastructure project.
Demand for power is rising in east Africa's second largest economy and Tanzania is expected to save billions of dollars over the next 20 years using natural gas instead of oil imports.
Orca operates the Tanzanian project via its wholly-owned subsidiary PanAfrican Energy and in cooperation with power company Songas, a consortium including state-run Tanzania Petroleum Development Corporation and Bermuda-based Globeleq.
It supplies the gas to 35 industrial customers and for power generation for the national grid by Songas and state-run Tanzania Electric Supply Company.
The east African economy has proven natural gas deposits of about 3.3 trillion cubic feet and is trying to use it to blunt the effects of high international fuel prices. (Editing by George Obulutsa and James Jukwey) (Email:nairobi.newsroom@reuters.com; Tel +254 20 2224 717)) (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/)
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Orca forms unit to build E.Africa gas network | News by Country | Reuters
