By the OGJ Online Staff
LONDON, Oct. 23 -- The London-based European Investment Bank and the World Bank have awarded a grant to the International Development Association (IDA) to make available to Tanzania a $183 million credit for the Songo Songo gas project.
Details on the terms of the credit were not disclosed.
The Songo Songo project involves the development of 1 tcf of natural gas reserves on a small island and in shallow water off Southern Tanzania, a gas gathering and processing system, and the construction of a 25-km marine pipeline and a 217-km land pipeline to Dar Es Salaam. The gas will be transported to the Ubungo thermal power plant near Dar Es Salaam, which will be converted from diesel fuel to natural gas.
The Tanzanian government has said that all of the financing for the project is in place, and the construction phase of the project will soon get underway. Bid documents for the major contracts -- construction of the gas processing facilities, the pipelines from Songo Songo Island to Dar Es Salaam, and the conversion of the existing 112-Mw Ubungo power plant in Dar Es Salaam to burn natural gas -- will be issued in mid-November. Awards are expected in March 2002.
The project also includes the addition of a fifth, 35-Mw turbine to the power plant. Commercial operation is expected in October 2003.
All the electricity will be sold through a 20-year power purchase agreement with Tanzania Electricity Supply Co. (TANESCO); gas not dedicated to electricity production will be marketed by Tanzania Petroleum Development Corp. (TPDC).
TANESCO will be privatized once the project is operational.
The Songo Songo gas field was discovered by state-owned Songas in 1974. Two of the five original wells are on the island and three in very shallow water just off the island.
In 1996 and 1997, the gas wells were completely rehabilitated and flow tested to confirm that the Songo Songo gas field would reliably supply all the gas needed over the 20-year life of the project.
AES Corp., based in Arlington, Virginia, is the lead investor in the project with a $250 million commitment. AES Tanzania purchased the majority stake in the project from TransCanada Pipelines International and PanAfrican Energy Corp., an exploration company based in the UK Channel Islands which was involved in the original discovery (OGJ Online, July 27, 2001).
The other shareholders are the capital group CDC Financial Services and state firms Songas, Tanzania Development Finance Co., TANESCO, and TPDC.