SongoSongo Gas-to-Electricity Project

The goal of the Songo Songo Gas to Electricity project is to develop natural gas from the Songo Songo gas field in Kilwa District to provide Tanzanians with a reliable source of low cost electricity. The project will form the basis of the development of gas industry and infrastructure in Tanzania.

Gas-to-Electicity Project

In October 1995, Ocelot Tanzania Inc. and TransCanada Pipeline Limited (TCPL Tanzania Inc.), in partnership with the Government of Tanzania (GoT), Tanzania Electric Supply Company Limited (TANESCO) and Tanzania Petroleum Development Corporation (TPDC), set out to create a company called Songas to implement the Songo Songo Gas to Electricity Project. Songas has developed the Songo Songo gas field in Kilwa District, Lindi Region, by constructing the gas processing facilities on Songo Songo island and the pipeline network to transport natural gas to Dar es Salaam where it will be used as the principal fuel supply for five gas turbine electricity generators. The pipeline will then continue to supply the Wazo Hill Cement Plant. The project will produce reliable electricity for the national grid and also bring gas to other industrial users in Dar es Salaam.

Gas Field Development

The Songo Songo Gas to Electricity Project will serve two onshore and three offshore natural gas wells at Songo Songo Island. Natural gas from the wells is then piped to a gas plant on Songo Songo Island.

Songo Songo Gas Plant

Two 35 million cubic feet per day processing units (dehydration and refrigeration) on Songo Songo Island has been built to process the natural gas from the wells. Any hydrocarbon liquids removed will be shipped to Dar es Salaam or consumed on-site as fuel. The project has brought about an improvement in the Island's infrastructure by modernising the airstrip and wharf and providing portable water and power supply.

GAS TRANSPORTATION

After processing, the gas is be transported through a 25km 12-inch pipeline from Songosongo to Somanga Funga, and from Somanga Funga through a 207km 16-inch pipeline to Ubungo Dar es Salaam where natural gas has replaced liquid fuel as feedstock in the generation of up to 115MW of electricity for the national grid. A 16km 8-in pipe line has been extended northwards to provide natural gas to the Wazo Hill cement plant where has replaced fuel oil as feedstock in the manufacture of cement.

Project Developers

The Tanzania Ministry of Energy and Minerals is responsible for coordinating the roles of TPDC and TANESCO, as well as ensuring that the Project meets the needs of all Tanzanians. The Ministry has been the principal government negotiator on commercial arrangements and has taken the lead on financing issues. TANESCO, the national utility, owns and operates Tanzania's power generating and distribution system. TPDC is the national oil company responsible for exploration, promotion and development of oil and gas resources in the country.

The main project sponsor was AES Sirroco of the USA, a large electricity company operating worldwide. The other sponsor is Pan African Energy, formerly Ocelot International, a gas development company, with operations in several African countries. Project investors are AES, Pan African Energy, TANESCO, TPDC, CDC, TDFL, EIB and World Bank, the later two through the Government of Tanzania. Project costs are estimated at US$ 350 million. The project will be implemented by SONGAS, a local joint venture company formed by Globeleq, TANESO, TPDC and CDC. Ocelot, now Pan African Energy will operate the gas field on behalf of Globeleq.

PROJECT SCHEDULE

The project had suffered considerable delay in implementation. Financial closing was attained on 11th October 2001. Construction of the pipeline commenced in the year 2003 and was completed in may 2004. The first gas reached Dar es Salaam in July 2004. The project attained commercial operations date in July 2004.

Project benefits to Tanzanians

• Meet the growing demand for electricity in Tanzania using a domestic natural resources

•  Reduce the country's dependence on imported oil for electric power generation

• Provide an alternate, lower-cost and more reliable power source
  create skilled and unskilled employment opportunities during construction and operations

• Permit the use of natural gas in industry as an energy source or a chemical feedstock (e.g. fertilizer production)

• Develop the infrastructure to boost exploration for oil and gas

• Provide power, gas and associated economic benefits to Songo Songo island and communities along the pipeline route

• Promote private investment in the energy sector and contribute to government revenue through fees, taxes and royalties

• Enable the Wazo Hill cement manufacturer to use natural gas as fuel instead of imported fuel oil.

• Enable Tanesco to diversify their generation options from the heavy dependence on hydroelectricity.