Country: Tanzania

TAQA Arabia, Egypt’s full-service energy and utility provider, has commissioned Tanzania’s first integrated Compressed Natural Gas (CNG) Filling Station and Conversion Center branded “Master Gas.” The project was carried out by TAQA Dalbit, a Joint Venture (JV) between TAQA Arabia and JCG Oil & Gas, a unit of the Janus Continental Group (JCG). The CNG station, expected to serve 800 vehicles a day, is the first of 12 stations that TAQA Dalbit plans to open in Tanzania in the coming years. TAQA Dalbit plans to invest $12 million in establishing the natural gas fuelling stations. TAQA Dalbit focuses on investing, developing, building and operating filling stations and conversion centers to convert and fill cars with compressed natural gas. A CNG-powered passenger vehicle emits about 25% less CO2 and is, on avearge, 50% cheaper than petrol cars. “We are on the cusp of a transformative shift in Tanzania’s energy landscape,” Tanzania’s Deputy Prime Minister and Minister of Energy, Dr. Doto Mashaka Biteko, said during the commissioning ceremony in the country’s city and financial hub of Dar re Salaam. “The new CNG Filling Station and Conversion Center is a monumental achievement that demonstrates the Tanzanian government’s keenness to provide state-of-the-art solutions and technological prowess as part of our commitment to form a sustainable, greener and economically efficient future.” Tanzania is betting on TAQA Arabia’s know-how and experience in energy projects to help the east African country to unlock its energy potential and benefit from its gas reserves. Beyond serving vehicles, the company also aims to deliver natural gas to households, catering to varied needs of customers in Tanzania with CNG and LNG. “TAQA Arabia is committed to expanding its presence in the Tanzanian market across various areas,” Chairman of TAQA Arabia, Eng Khaled Abu Bakr  said. “TAQA Arabia is looking also in adding greater value to clients either with natural gas distribution, conventional and renewable power generation and distribution and other utility services that the company provides.” TAQA Arabia, a subsidiary of Qalaa Holdings based in Cairo, provides energy and utility services to over 1.7 million customers across 50 cities in Egypt. The services include natural gas, electricity, renewable energy, petroleum products, and water.

The Government of Tanzania has completed negotiations with Shell and Equinor, Minister of Energy January Makamba said yesterday. The completion of the negotiations enables the writing and signing of key contracts towards the $30bn Tanzania LNG project, including the Host Government Agreement (HGA). The project is expected to monetise 16 Tcf of gas discovered by Shell on Block 1 and Block 4, and 20 Tcf of gas discovered by Equinor on Block 2. Partners on the licenses include ExxonMobil, Ophir Energy, and Pavilion Energy. In June 2022, a Framework Agreement was signed between the Government of Tanzania signed, Equinor, and Shell to support negotiations. The HGA was then expected to be signed by the end of 2022 for a taking of the final investment decision (FID) in 2025. Equinor has scheduled a 3-year planning and engineering programme for the pre-FEED and FEED and expects construction to take at least 4 years after that. An independent macroeconomic study prepared last year by Stanbic Bank Tanzania and endorsed by the Ministry of Energy found that the $32.7bn, 15 million tonnes per annum (MTPA) terminal could generate fiscal proceeds of up to $6bn a year for Tanzania. Tanzania LNG is also expected to be a pathfinder in the development of sustainable LNG infrastructure in Africa with the partners reportedly exploring several low-carbon electrification options such as hydropower and solar, along with carbon capture utilization and storage (CCUS) technologies.

Hawilti released an important new study on Gas for Africa in partnership with the International Gas Union (IGU), assessing the potential for domestic gas resources to energise Africa in line with the global energy transition. The African Energy Commission (AU-AFREC) and the Africa Finance Corporation endorse the report and its findings. The study starts by analysing current energy poverty trends in Africa, a continent with the lowest electricity per capita consumption in the world and the lowest CO2 per capita emissions. It argues for a pragmatic use of natural gas reserves to support a broad industrial and economic development of Africa in a way that is sustainable and enables a just energy transition. Mickael Vogel, Director & Head of Research, Hawilti “Energy poverty in Africa often boils down to the number of people without access to electricity – 600 million, or without access to clean cooking – 970 million. Unfortunately, this assessment misses the point and can lead to responses and solutions that are ill-adapted to Africa’s development needs. As it argues for a better use of gas, the report calls for more ambitious targets around energy access so that we can both bridge Africa’s energy deficit but also support economic growth and industrialisation.” The ”Gas for Africa” report highlights several ways in which gas can have a positive impact on Africa’s socio-economic development including by switching away from coal and diesel, developing energy-intensive industries and gas-based industrialisation, displacing fuelwood and biomass in households, generating baseload electricity to integrate intermittent energies, and building gas systems that can be decarbonisable in the future with hydrogen, renewable gas, and CCUS. However, a pragmatic utilisation of Africa’s 18 Tcm of proven gas reserves – or 9% of the world’s reserves – calls for a reorientation towards domestic monetisation. Most of the gas produced in sub-Saharan Africa remains exported, with local consumption still limited because of limited infrastructure availability. Additional barriers include limited access to capital, security risks, and policy uncertaint.y To overcome these key barriers to development, a total of eight guiding principles are given as recommendations to help stakeholders and policy makers navigate the complexity of the gas industry: The full report is available for download here.

TotalEnergies, CNOOC and the Uganda National Oil Co. have taken a final investment decision (FID) today on the development of onshore oilfields around the Lake Albert in Uganda, and a massive export pipeline to Tanzania. The first discovery was made in January 2006 by Hardman Resources at the Mputa-1 well. Since then, over 1.4bn barrels of recoverable oil have been proven in the area. However, repeated tax disputes with the Government of Uganda and lack of refining and export infrastructure constantly delayed their development. The project was put back on the table only in April 2020 when authorities agreed the sale of TullowOil’s entire assets in Uganda to TotalEnergies for $575m. This sale was officially completed in November 2020, making TotalEnergies operator of most discoveries and finally paving the way for a final investment decision (FID). TotalEnergies is now operator of the Tilenga oil project, where first oil is expected in 2025 with a peak production projected at 190,000 barrels of oil per day (bopd). The Tilenga project covers six oil fields within Contract Area CA1, License Area LA-2 (North) and Exploration Area EA-1A, all located within the Albertine Graben in Western Uganda. Plans for the project include the drilling of 426 wells from 31 well pad locations, supported by a network of underground pipelines to collect oil production and transport it to a 200,000 bopd central processing facility (CPF) built within the planned Industrial Area in the Buliisa District. Once treated at the CPF, oil will be exported via the 1,443 km East African Crude Oil Pipeline (EACOP) that will terminate at an oil depot and an offshore loading terminal in Tanga, Tanzania. On its side, CNOOC is operator of the Kingfisher oil project with a projected peak output of 40,000 bopd. Advancing the project’s low-cost and low emissions, TotalEnergies was able to fast-track the FID and get it approved less than two years after it acquired its operated interest from TullowOil. “The design of the facilities incorporates several measures to limit greenhouse gas emissions well below 20 kg CO2eq/boe, including the extraction of Liquefied Petroleum Gas (LPG) for use in regional markets as a substitute for burning biomass, and the solarization of the EACOP pipeline,” the company said in a statement. In parallel, the Government of Uganda is also hoping to build a 60,000 bpd refinery on site to process its domestic crude. The Project Framework Agreement was signed with the consortium comprising YAATRA, BHGE, LionWorks, and Saipem in 2018 to develop, finance, construct and operate the greenfield oil refinery. Full details on the Tilenga Oil Project and the EACOP pipeline project are available in the “Projects” section within your Hawilti+ research terminal.

On Sunday, the East African nations of Tanzania and Burundi signed an agreement seeking to build a $900m railway that would connect them both and boost trade. The Memorandum of Understanding (MoU) signed in Kigoma paves the way for the construction of a 282km line from Uvinza in western Tanzania to Burundi’s capital Gitega. It was inked by both countries’ finance and transport ministers. The two governments will jointly seek financing for the railway, Tanzania Finance Minister Mwigulu Nchemba said. Tanzania is increasingly sourcing capital to expand its railway network and become a trade hub for the sub-region. Last December, it signed a $1.9bn contract with Turkish contractor Yapi Merkezi to build a 368km section of standard gauge railway. The project is part of a 1,219km SGR line that Tanzania is already building to link Dar es Salaam with the port city of Mwanza on the shores of Lake Victoria.

Earlier this week, Tanzania signed a $1.9bn contract with Turkish contractor Yapi Merkezi to build a 368km section of standard gauge railway. The project is part of a 1,219km SGR line that Tanzania is building to support regional trade in East Africa by linking Dar es Salaam with the port city of Mwanza on the shores of Lake Victoria. Two similar lines are already nearing completion. Under the contract signed this week, Yapi Merkezi will execute the section linking the towns of Makutopora and Tabora in Tanzania’s Masanja Kadogosa region.  

The ORCA Energy Group has planned a $50m capex for the continued development of the Songo Songo gas project in Tanzania next year. Via its subsidiary PanAfrican Energy, ORCA operates the wells and gas processing plant at the Songo Songo island in central Tanzania. The 2022 programme includes $20 million for a 200 km2 3D seismic program over the Songo Songo development license, $11.5 million to expand the PanAfrican Energy’s existing downstream gas and CNG distribution system, and approximately $7 million for ongoing maintenance and facilities projects. The remaining $11.5 million represents the expenditures associated with the current work over program and inlet compression project, representing a combined $63m investment approved in 2019. The seismic programme would be pretty significant because PanAfrican Energy currently relies on 2D seismic lines ranging from 1978 to 2009. These are insufficient to maximise future upstream gas developments at Songo Songo. “The 3D seismic program is required to de-risk both the future development drilling in the SS gas field and potential exploration drilling of prospective resources prior to the SS license expiring in October 2026.,” ORCA said last week. Source: ORCA Energy Group ORCA continues to see potential for growth and gas production at Songo Songo, even beyond 2026. For now, it is projecting a gas production of at least 100 MMsfd for 2022, including about 40 MMcfd of Protected Gas reserves for the Tanzania Petroleum Development Corp. (TPDC). Details on the Songo Songo Integrated Gas Development are available in the “Projects” section within your Hawilti+ research terminal.

Following the signing of the Framework Agreement last January, the Government of Tanzania has now issued a special mining licence (SML) for a period of over 30 years for the Kabanga Nickel project, covering the full life of the project. The Kabanga Nickel Project holds the world’s largest development-ready nickel sulphide deposit and will produce Class 1 battery grade nickel, cobalt and copper. Its cradle-to-gate operation will notably rely on the hydromet technology, which is more cost efficient than smelting but can also reduce the carbon footprint and environmental impact of operations. Based on approximately 600 km of drilling, Kabanga’s previous owners, Barrick Gold Corporation and Glencore, had published a 2014 Resource Estimate (Measured, Indicated and Inferred) of 58 million tonnes of ore at an average in-situ nickel grade of 2.62%. Mineralisation of the resource is greater than 95% massive sulphide. In order the develop the project, Kabanga Nickel and the Government of Tanzania had signed last January a Framework Agreement establishing the Tembo Nickel Corporation. The operating company is now the one in charge of mining, processing and refining the Class 1 nickel with cobalt and copper co-products. Tembo is owned at 84% by Kabanga Nickel with the remaining 16% held by the Government of Tanzania. By accelerating the development of the project, Kabanga Nickel will be increasing the supply of crucial minerals in the development and manufacture of batteries used in electric vehicles. On the back of growing demand for EV batteries, global supply of nickel is forecast to grow from 2.25 million tonnes in 2020 to 5 million tonnes by 2040, according to Roskill.

Tanzanian Energy Minister January Makamba has declared that negotiations would officially start on November 8 to get the Tanzania LNG project off the ground. This notably follows a meeting today in Dar es Salaam with Paul McCafferty, Equinor’s Vice President Exploration & Production International – Africa. On October 4th, Tanzanian President Samia Suhulu Hassan and Minister Makamba had also held a similar meeting, virtually, with Shell’s CEO Ben van Beurden. The development of the $30bn Tanzania LNG project in Lindi, in southern Tanzania, has been on the table for several years but talks had been suspended since the end of 2019. Last January, Equinor had even decided to write down the value of the project by $982 million, saying that its current economics did not justify keeping it on the balance sheet. But things changed when President John Magufuli died in March and his Vice President Samia Hassan took over the country’s top job. She made a direct mention of the project during her inauguration speech, giving clear signals of her intention to revive it. Since then, the Government of Tanzania has had several talks and discussions with Equinor and Shell in order to address pending issues and pave the way for the project’s development. Tanzania LNG would monetise almost 50 trillion cubic feet of gas (Tcf) discovered in offshore blocks 1, 2 and 4. Block 2 is operated by Equinor (65%) along with its partner ExxonMobil (35%) while the national oil company TPDC has the right to participate with a 10% interest. The partners have drilled a total of 15 exploration wells since 2011, resulting in nine discoveries with an estimated volume of over 20 Tcf. On the other side, Blocks 1 and 4 are operated by Shell (60%) along with Singaporean partner Pavilion Energy (20%) and Indonesian partner Medco Energi (20%). The base case development plan envisages a two-train onshore facility with a combined capacity of 10 million tonnes per annum (mtpa). On the Tanzanian side, hopes are that construction could start by mid-2023 for a commissioning by June 2028.

Earlier today, Tanzania celebrated the readiness of the Julius Nyerere’s main dam for its first phase of reservoir impounding. The project’s water storage basin reached a depth of 95m in its mid-section, allowing for the start of water filling. The project has been under construction since 2019, with the engineering, procurement and construction executed by the Egyptian consortium of Elsewedy Electric and The Arab Contractors. The facility involves a 134m RCC gravity dam and appurtenant structures, with expected reservoir length of 100km, covering an area of about 1,350km2. Upon completion, the 2,115 MW project will be one of sub-Saharan Africa’s biggest hydroelectric facility. It is expected to be able to generate up to 6,307 GWh a year. Full details on the Julis Nyerere Hydropower Plant (Rufiji) are available in the “Projects” section within your Hawilti+ research terminal.

Nigerian energy infrastructure conglomerate, Sahara Group, has announced an investment of $1bn into Africa’s liquefied petroleum gas (LPG) value chain during the African Refiners and Distribution Association (ARDA) conference 2021 in South Africa this week. “Sahara, through its subsidiary, WAGL Energy Limited is already working towards investing $1 billion to ramp up its LPG fleet and terminal infrastructure over the next five years. In addition to the vessel fleet, Sahara is in the process of building over 120,000 metric tonnes of LPG storage in eleven countries,” he said. In October 2020, Sahara and Côte d’Ivoire’s national oil company PETROCI notably broke ground on a new 12,000 MT LPG storage terminal on the outskirts of Abidjan. The company has also earmarked additional such projects in Nigeria, Senegal, Ghana, Tanzania and Zambia while considering additional investment elsewhere on the continent.

PanAfrican Energy Tanzania, the subsidiary of the Orca Energy Group that operates the wells and gas processing plant at Songo Songo in Tanzania, has signed an agreement with Exalo Drilling for the workover of three onshore wells. Activities are set to start in September 2021 on Songo Songo Island. The 2021 workover programme will notably see the wells recompleted with corrosion resistant chrome tubing while returning two wells to production and ensuring the third well continues to produce safely. Songo Songo is Tanzania’s flagship gas project and currently supplies about 60% of Tanzania’s gas, mostly used for power generation. While PanAfrican Energy operates the wells and the 110 MMscfd gas processing plant, the Songo Songo development remains owned by Songas, itself majority owned by Globeleq. Only gas produced beyond a threshold of 44.8 MMscfd can be freely marketed and sold by PanAfrican Energy. Source: Orca Energy Group The first 45 MMscfd is classified as “Protected Gas” and is owned by the Tanzania Petroleum Development Corp (TPDC) and sold under a 20-year gas agreement expiring on July 31st, 2024. This gas is used by Songas to fuel its 190 MW Ubungo gas-to-power plant but is also used for distribution to the Tanzania Portland Cement Company, and for Tanzania’s village electrification programme. Such distribution is ensured by Songas’ infrastructure which includes the 105 MMscfd, 232km pipeline to Dar es Salam and a 16km spur line to the cement plant. Beyond 44.8MMscfd, the gas is classified as “Additional Gas” and can be freely commercialized by PanAfrican Energy. The company has been steadily increasing its production and sales of Additional Gas to support additional power generation facilities in Dar es Salam, power several industries and develop a growing Compressed Natural Gas (CNG) business.

Earlier this year, Sahara Tanzania announced the expansion of its petroleum products storage capacity in the country to 72 million liters. Nigerian energy and power conglomerate Sahara Group has been present in Tanzania since 2015, starting with 10 loading arms and four storage tanks with a combined storage capacity of 36m litres. It has now expanded such infrastructure to 20 loading arms and eight storage tanks. The infrastructure expansion is ine line with the company’s commitment to support products availability in East Africa. Sahara Tanzania is in fact currently involved in expanding storage capacity of automotive gas oil, premium motor spirit and Jet A1. The company has notably committed to build two liquefied petroleum gas (LPG) tanks with a capacity of 6,000 cbm. Sahara Group is one of the largest and most integrated African energy and infrastructure conglomerates with significant business interests across the upstream, midstream, downstream, power generation and logistics & trading industries across the continent and globally. The group started in 1996 as Sahara Energy Resource to trade petroleum products, entering Ghana in 2000, Côte d’Ivoire in 2001, Tanzania in 2015 and Zambia and Guinea-Conakry in 2017. Since 2017, it has consolidated all its petroleum trading, marketing, distribution and storage activities under a single entity, Asharami Synergy.

Since TotalEnergies announced its acquisition of TullowOil’s shares in the Tilenga oil project and the East African Crude Oil Pipeline (EACOP), Uganda has crystalized a lot of the global tensions around the debate of development vs. environment. By developing the 1.7 billion barrels of contingent oil resources discovered around the Lake Albert, TotalEnergies is expected to produce 190,000 barrels of oil per day before the end of this decade, propelling Uganda into the club of African oil producers. The country would be producing as much as Ghana and Gabon currently, generating significant revenue for its state coffers. To export that oil to global markets, TotalEnergies is building the world’s longest heated crude oil pipeline, a 1,443km line linking Uganda’s oilfields to the Tanzanian port of Tanga. Once again, this means revenues for the state of Tanzania via transit fees. The integrated development will result into billions of dollars injected into both economies, support the development of infrastructure, and create jobs in the process. Despite growing opposition from environmentalist groups and NGOs, and the withdrawal of a few of its financiers, the project is progressing. On September 1st, the Ugandan Cabinet approved the EACOP Bill that gives significant support to the pipeline’s construction and operation by granting it four different fiscal packages. The Bill is seen as giving strong backing to the EACOP Company made of TotalEnergies (62%), UNOC (15%), TPDC (15%) and CNOOC (8%). The Government of Uganda, which had long delayed the initial takeover of TullowOil’s assets by TotalEnergies on the back of fiscal disagreements, is now getting generous. It is notably proposing tax packages on corporate income tax and value added tax (VAT) under which the EACOP Company will be exempt of the former for ten years and will be subject to zero rated VAT for its export of goods and services. The exemption of corporate income tax for ten years is significant given that the standard rate applied to resident and non-resident corporations in Uganda is of 30%. In addition, the EACOP Company is set to benefit from a package on withholding tax as well as an exemption from paying transit fees in Uganda. The withholding tax is fixed at 5%, following the terms set within the previously signed Host Government Agreement (HGA). The set of fiscal incentives granted to EACOP notably follows the withdrawal of several financiers and banks from the project. Earlier this year, BNP Paribas, Société Générale & Crédit Agricole reportedly withdrew their funding commitment on the back of human rights concerns

ARA Petroleum Tanzania (APT), which took over the operatorship of the onshore Ruvuma PSA in Tanzania last year, has received a two-year extension of the license. The granting of the extension was necessary to complete key exploration activities on the block, including the acquisition of 200 km2 of 3D seismic data and the drilling of the Chikumbi-1 exploration and appraisal well (formerly known as Ntorya-3). Completion of the exploration programme will further support the conclusion of negotiations of the Gas Terms for the Ruvuma PSA and pave the way for the development of the Ntorya Gas Project. The development of the Ntorya gas accumulation has the potential to be Tanzania’s next big domestic gas project. Located in southern Tanzania where Maurel & Prom produces gas from the Mnazi Bay PSC since 2015, Ntorya used to be operated by Aminex’ subsidiary Ndovu Resources with a 75% interest before APT took over operatorship of the asset with a 50% interest last year. Aminex has since then retained a 25% interest in the license. The Ntorya accumulation is located within the onshore Ruvuma Production Sharing Agreement (PSA) signed in October 2005, which contains the Mtwara licence and the Ntorya development area, the latter being currently in negotiation. The PSA was operated by Tullow Oil until 2011 and saw the successful drilling of the Likonde-1 well in 2010, the Ntorya-1 well in 2012 and the Ntorya-2 well in 2017. Both Ntorya-1 and Ntorya-2 successfully tested gas with flow rates of 20 MMscf/d and 17 MMscf/d respectively, while Likonde-1 encountered gas shows. As a result, Ndovu applied to the Ministry of Energy for Tanzania in September 2017 for a 25-year development licence over the Ntorya area, with the application recommending the drilling of one well, the acquisition of 3D seismic over the Ntorya Field and the construction of a raw gas pipeline tied to the National Gas Gathering System at the Madimba plant, starting point of Mnazi Bay-Dar es Salam gas pipeline. In April 2020, Ndovu Resources secured a one-year extension of the Ruvuma Licence, almost three years after it applied for it. The extension did not provide enough time to complete the exploration programme, reason why new operator APT had to apply for another one which was secured a lot faster.