ORCA Exploration and the government has agreed for the additional gas plan to double Songo Songo gas supply for market.
The agreement came at a time when stakeholders are pondering to increase supply for the local market ahead of demand due to new industrialisation drive. Experts in gas industry are figuring that given the government to industrialise the nation, gas demand will surge to historical high in the next five years.
However, to start tackling the supply issue ahead of demand, last month Orca, through its subsidiary Pan Africa Energy (PAET), agreed for additional gas plan that would double supply to 185 Million standard cubic feet per day (MMscfd) from current 90 MMscfd.
PAET Deputy Managing Director Andrew Hanna said the approval for additional gas plan two was a decisive milestone in the already incredible story of the Songo Songo project.
“It now takes the Songo Songo partners to the next stage of the project. We are excited by the future, and are very grateful to the government for its cooperation and support of this project,” Mr Hanna said over the weekend.
PAET had invested 60 million US dollars to increase supply by drilling new well thus pushed up its capacity to 185 MMscfd. We had some 90 MMscfd behind the pipe, the agreement enables us to sell the additional capacity to over increased demand,” Mr Hanna said.
Songo Songo gas project, the government initiative, in partnership with the World Bank and the private sector developers, has been in the vanguard of the burgeoning gas industry in East Africa for nearly a quarter of a century.
Under the Production Sharing Agreement (PSA) for the Songo Songo gas field, production is identified as “protected gas” or “additional gas.” Protected gas is the gas that PAET gives Tanzania Petroleum Development Corporation (TPDC) free after recovering production cost.
TPDC receives 45 MMscfd a day. While additional gas is the gas PAET is making a profit out of it by selling to various customers.
Prior to being permitted to market and sell increased volumes of additional gas from the Songo Songo Field, under its Project Agreements PAET is required to prepare and submit for approval an additional gas plan that demonstrates how such demand for additional gas can be met to the end of the existing licence in 2026, while assuring the continued and reliable supply of up to 45 MMscfd of protected gas to 2024.