Tanzania

Mnazi BayTo top

The Mnazi Bay/Msimbati Gas Fields are located in the Mtwara region of south-eastern Tanzania, bordering on Mozambique. The resource was discovered by AGIP, which drilled the discovery well on a seismic defined structure in 1982. The well was evaluated as having oil and gas in several potential reservoir zones and was drill stem tested over two zones.

These tests demonstrated the commercial potential of the discovery, although the well was suspended by AGIP due to lack of gas markets at the time. The concession was subsequently relinquished by AGIP and ultimately acquired by Artumas.

In 2003, Wentworth Resources (Previously Artumas) initiated discussions with the Government of Tanzania with the objective of implementing a Gas To Power (GTP) project as a means of exploiting the potential gas resources. This involved exporting the produced gas via pipeline to a gas fired power plant coupled to the local power transmission system for local power distribution. In 2004, the Production Sharing Agreement (PSA) was executed, with the development licence being granted in 2006 clearing the way for implementation of the project. In October 2006, the Government of Tanzania issued a 25 year development license. In 2005, Wentworth Resources (Previously Artumas)  initiated development of the field and GTP project, with first electricity generated in 2006, and project completion in 2007. Cove Energy has not acquired any of the business or assets relating to the GTP project and its associated infrastructure.

Cove’s Tanzania operations consist of a 16.38% working interest in a gas producing asset currently supplying gas to the power plant owned by one of the partner’s in the consortium, Wentworth Resources Limited (“Wentworth”). In addition Cove has a 20.4% interest in the Mnazi Bay exploration project. Maurel & Prom is the operator of both the gas producing and exploration projects. The gas producing asset supplies approximately two million standard cubic ft per day (“mmscf/d”) of gas to the power plant and there are plans to increase this over the next two years. There are high level discussions continuing with Chinese industrialists and the Tanzanian government to build a 300 Mega Watt (“MW”) power plant. There are also discussions to supply gas to planned local cement manufacturing concerns.

Both Maurel & Prom and Wentworth have undertaken to present feasibility studies on a variety of projects aimed at monetising the gas resource. Wentworth management has expertise in building methanol/urea facilities and this will form the basis of their report. A pre-feasibility study indicated that a methanol/urea plant may be the best monetisation method. The plant will cost about US$1.5 billion, will have capacity for one million tonnes per annum (“mtpa”) methanol and 0.8 mtpa urea.

Maurel & Prom has looked at wider monetisation options including the Chinese power plant, which envisages a 300 MW gas-based generation plant at Mtwara, a High Voltage Direct Current (“HVDC”) overhead transmission line from Mtwara to Singida in central Tanzania and HVDC converter stations and connections to the national grid.

Additional and new gas sales agreements would lead to a renewed exploration programme including the acquisition of new 3D seismic and the drilling of exploration wells.

Tanzania Mnazi Bay partnership To top