26 November 2016, Dar es Salaam — Royal Dutch Shell and its partners — Pavilion Energy and Ophir Energy have announced the commencement of gas drilling off the coast of Tanzania in an $80 million investment project.
The drilling will cover two wells in Block 1 and 4, located in the offshore Mafia deep basin and with each depths of up to 2,800 metres.
“In the current investment climate, there is a need to have strong project fundamentals, including government support and cooperation” Shell announced in Dar es Salaam last week.
Tanzania has been exploring for oil and gas for the past 64 years, making its first natural gas discovery in 1974 at Songo Songo Island and at Mnazi Bay.
Currently, the country has proven natural gas reserves of 57 trillion cubic feet, with at least 49.5 trillion cubic feet of those reserves far offshore in the Indian Ocean.
The two wells in Block 1 and 4 are being developed at a time oil prices are falling in the international market.
The development of Blocks 1 and 4 is part of the Tanzania Liquefied Natural Gas Project under the Vision 2025 economic plan.
“By 2025, the economy of Tanzania will have changed from a low productivity agricultural economy to a semi-industrialised one led by modernised and highly productive agricultural activities, which are effectively integrated and buttressed by supportive industrial and service activities in the rural and urban areas.
A solid foundation for a competitive and dynamic economy with high productivity will have been laid,” Tanzania Vision 2025 envisages.
East Africa is emerging as one of the world’s frontiers for oil and gas.
Repeated gas finds off East Africa’s coast there have led to predictions that the region could become the world’s third-largest exporter of natural gas, and plans are underway for the development of LNG facilities to pave the way for processing.
Falling oil prices
Royal Dutch Shell and Exxon have remained focused on Tanzania’s gas exploration despite the falling oil prices.
Shell posted $1.4 billion in net income for the third quarter this year after reporting a net loss of $6.1 billion a year earlier.
Looking ahead, Shell said capital investment for 2017 is expected to be $25 billion, at the low end of its $25 billion-$30 billion range.