BP Makes Play for Tanzanian Gas Assets

From Oil Price

By Jen Alic

Tanzania is such a hot place for gas these days that even oil-focused major BP Plc (NYSE: BP) is being lured to the East African country to invest in natural gas exploration.

In late February, BP execs descended on Tanzania with a request to pursue natural gas investments and try their luck in a venue that has become one of the biggest gems in the region.

Tanzania is open to the request, of course, but made it clear that the competition is pretty high. Total SA of France is also in line for Tanzanian gas exploration license. Norway’s Statoil is also shopping in Tanzania.

Recent offshore discoveries of some 33 trillion cubic feet of gas put Tanzania on the map, and the risk is relatively low. Tanzania has a natural gas processing plant on Songo Songo Island, with a 70 million cubic feet/day capacity. It is also planning an LNG terminal.

Tanzania is already using some of its natural gas to produce electricity and to power industries. Between 420 and 450 MW of electricity in the country is generated by natural gas while the actual installed capacity for gas-to-electricity generation stands at 575.5MW.

Tanzania has started putting up the infrastructure for commercial distribution of natural gas, including signing of US$1.2 billion loan agreement with China for construction of a 532km pipeline from Mtwara to Dar es Salaam. The World bank suggests that the gas could boost the country’s exports by as much as 3 billion US dollars a year, once the gas comes on stream.

Tanzania is also in the process of restructuring its state-run petroleum regulator and put a gas policy in place soon.

London- based BP Plc (BP/) is doubling exploration drilling this year and is stepping up spending on projects in Angola, the North Sea and the Gulf of Mexico.

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