Kenya and Tanzania to Build U.S.$630 Million Pipeline

Kenya and Tanzania will construct a $630 million natural gas pipeline from Tanzania to Kenya to help meet the region’s rising energy needs.

The project which is said to be in the pipeline when the East African Energy Ministers meet this October will save more than 126 million East Africans upon its completion by supplying electricity and powering industries in Tanzania, Kenya and Uganda.

In a telephone interview from Arusha, Mr Peter Kinuthia, a senior energy Officer at the East African Community said that the Petroleum Committee Ministers will pick the best option on the proposal to build the natural gas within countries because it will help to foster development as the pipeline has the potential to supply 710-720 MW of power.

“The East African Partner States are seeking for ways on how to improve energy infrastructure and ensure reliable electricity supplies to cater for economic expansion and population”, he said.

According to a recent study all four routes proposed in the report envisioned the pipeline running about 500 kilometers (310 miles) from Tanzania’s commercial hub of Dar es Salaam through the northern town of Tanga and ending at Kenya’s port city of Mombasa. It could be operational by 2015, and an offshore alternative would be too expensive.

The study said that the four most feasible options for the pipeline were for it to run across land as opposed to sea, which would be too expensive. The feasibility study comprises four on-shore routing options and one off-shore option. The investment cost of the on-shore options are in the range of $515-630 million.

Tanzania has a proven natural gas reserve of 7.5 trillion cubic feet. Among the factories that will be in the position to benefit from the project will be Tanga Cement which will have access to cheaper energy costs.

So far nine international companies have submitted bids for oil and gas exploration blocks in Tanzania’s Tanganyika rift basin and interest in the country’s hydrocarbon sector continues to rise.

In their statement the Tanzania Petroleum Development Corporation (TPDC) mentioned companies that tabled their bids for evaluation include French’s oil major, Total SA, Canada-based Fort Calgary Resources Ltd., UK’s Orphir Energy PLC, and New Age Exploration Ltd and Swala Energy, both of Australia.

Others are Australia’s Beach Energy Ltd, and U.S based firms Kosmos Energy Ltd and ERHC Energy Inc.

The Lake Tanganyika rift basin is part of the western arm of the East African rift valley, where at least a billion barrels of oil have been discovered in neighboring Uganda.

Spurred by oil discoveries in Uganda as well as gas discoveries off the Tanzanian coast, interest in the country’s hydro carbon sector has been on the rise.

Tanzania is expected to hold a separate deep-offshore bidding round for at least 13 blocks off its coastline next year. At present, Tanzania has licensed 12 deepwater blocks and recent exploration works have encountered at least 7.5 trillion cubic feet of natural gas. The country is yet to discover commercial oil reserves.