A Review of the Nigerian Energy Industry

Statoil, ExxonMobil to invest $30bn in LPG production in Tanzania

Statoil-in-Offshore-Mozambique-FarmoutExxonMobil21 October 2013, Dar es Salaam – NORWAY’S Statoil and United States based ExxonMobil will invest up to 30 billion US dollars (over 48.2trn/-) in the next ten years before commercial production of liquefied petroleum gas (LPG) starts by 2021 earliest.

The company’s Executive Vice-President responsible for Development and Production International, Lars Bacher, said in Dar es Salaam on Friday that Stateoil which has 60 per cent of the stake is working in partnership with ExxonMobile and Tanzania Petroleum Development Corporation (TPDC).

“We have so far spent over one billion US dollars (over 1.6trn/-) in drilling exploration wells at Zafarani, Lavani and Tangawizi which is in between Kilwa and Mtwara in the deep sea,” said Mr Bacher who is in the country to attend the forthcoming Oil and Gas Conference and 4th round of exploration blocks allocation discussion due to be held later this month.

He said currently, a hired exploration ship is drilling more wells in the deep sea and will stay there for the next 36 months. Part of the money will go into construction of pipelines and LPG processing plant at a location to be decided later.

“We hope to make a decision on whether we will go into commercial production by 2016 or 2017 and thereafter production can start in 2021 that’s the earliest possible time,” Bacher pointed out.

The exploration ship has 20 locals on board who are working along their foreign peers to get skills and knowledge of the job. “All signs are that we will succeed and get the minimum of recoverable volumes to go into commercial production,” he noted.

Last June, Statoil and ExxonMobile discovered three trillion cubic feet of natural gas at Lavani well which was in addition to one trillion cubic feet and an earlier 5 Tcf discovery in the Zafarani sidetrack in the same block just 16 kilometres away earlier this year.

Statoil which holds a 65 per cent stake and an operating licence on 5,500-square-kilometre Block 2 on behalf of Tanzania Petroleum Development Corporation (TPDC), partners with ExxonMobil Exploration which has 35 per cent.

Bacher said decision to go into commercial production will also depend on market performance especially price of gas, saying current major markets are in Asia where prices are currently very high.

“But these prices will likely fall because they are artificial, we think,” the Statoil vice-president noted. The company’s vice-president responsible for Marketing, Processing and Renewable Energy, Eldar Saetre said the country’s position is convenient to gas markets globally, hence warranting commercial production.

“The country is well positioned for the global gas markets because from here we can go across the Atlantic or Pacific Oceans,” said Mr Saetre.

Saetre said other factors to warrant their huge investment include a stable fiscal regime, respect to production sharing agreements signed and continued economic growth and political stability. The Norwegian company is expected to bid for another block in the 4th round which ends early next year.

– Tanzania Daily News

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