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INTERVIEW: UK's Wentworth eyes gas demand growth in core Tanzania market

Highlights

Upside potential for key Mnazi Bay gas field

Tanzania set for demand growth in power sector

Huge deepwater gas finds remain undeveloped

London — Tanzanian gas demand is set to rise in the coming years on the back of higher consumption in the power sector, as the government looks to provide more access to electricity for the southeast African country's growing population, the head of producer Wentworth Resources said in an interview.

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Wentworth is a partner in Tanzania's onshore Mnazi Bay gas field, which produces some 65-75 MMcf/d (1.8-2.1 million cu m/d) of gas and provides around 70% of the country's gas supply.

Wentworth CEO Katherine Roe told S&P Global Platts that gas demand was expected to rise further as Tanzania builds out its Kinyerezi power station complex near the capital Dar es Salaam.

The complex -- which started generating in 2015 -- already has two operational gas-fired units, with plans to extend the first and for two more units.

"We have a line of sight from the Kinyerezi-1 extension -- that is built and is preparing to be commissioned in the second half of this year," Roe said.

That would provide some 20-30 MMcf/d of additional gas demand, she said.

Roe said there are also plans to build additional power stations in the complex -- Kinyerezi-3 and 4 -- which are currently in the design phase.

Tanzania -- a country of some 60 million people -- is expected to see its population balloon to 137 million by 2050. "We have to look at the whole of the puzzle to see how big the demand growth will be," Roe said.

In addition, there is a shift toward more industrial activity in Tanzania.

"Very little gas is currently produced for industry," she said, with just small sales from Mnazi Bay to cement, tile and steel factories.

"The opportunity is coming with the increased population and move toward industrial uses, and it is that industrial load that is going to provide a step-up in gas demand," she said.

Pipeline capacity

Since 2015, gas from Mnazi Bay has been supplied into the National Natural Gas Infrastructure (NNGI) pipeline linking Mnazi Bay with Dar es Salaam, which Roe said was the biggest gas infrastructure project built in East Africa to date.

"This demonstrates Tanzania's commitment to enable gas production to grow in the medium- and long-term," she said.

The pipeline has a capacity of 780 MMcf/d, which gives it ample additional space for future production given that currently it flows around 90 MMcf/d.

The only other gas producer in Tanzania is PanAfrican Energy, which operates the Songo Songo field, while there is potential for other upstream developments in the country too.

"The demand growth trajectory that we see will be more than enough to accommodate all of us," Roe said.

Mnazi Bay is operated by France's Maurel & Prom with a 48% stake, with Wentworth holding 32% and the Tanzania Petroleum Development Corp. (TPDC) the remaining 20%.

TPDC buys the gas at a fixed rate, which is currently $3.24/MMBtu and rises with inflation.

Roe said the five wells at the field were capable of producing more than 100 MMcf/d without further capital expenditure following a recent work program completed in early 2020.

The gas sales agreement with TPDC is for contracted volumes up to 130 MMcf/d, and in order to reach that volume a new development well would be needed, which Roe said would represent "a larger piece of capex."

Roe said Wentworth was in discussions with Maurel & Prom about the work, which could be carried out in a 1-3 year timeframe.

Low-hanging fruit

Current reserves at Mnazi Bay are sufficient for the field to produce at 130 MMcf/d and Roe said there were also additional reserves at the concession that could be proven.

"We will look more closely at those prospects and try to identify the low-hanging fruit to enable us to prove up more reserves and produce more out of Mnazi Bay," she said.

Wentworth has also looked at other blocks onshore Tanzania, while the deepwater offshore is not something Wentworth would look to pursue at this stage, she said.

Tanzania has some 50 Tcf of gas resources in its deepwater after drilling campaigns by the likes of Equinor and Shell.

However, the resources remain undeveloped for now and the key to unleashing Tanzania's full potential is for the government to reach agreements with the offshore players, Roe said.

"Tanzania wants to position itself as the East African gas hub -- that's the country's political ambition," she said.

"If they can start development of the offshore gas, that's really the opportunity for Tanzania to have large volumes."

Roe also said Wentworth had the ambition to become an operator in the region and to grow the company, and was not content to hold just a single, non-operated asset.

Tanzania will remain the company's main focus. "If there's an opportunity to do more of what we do best, that would be the priority," she said.

"We would like to grow and achieve scale and relevance," she said, adding that Wentworth enjoyed "strong in-country political capital."

She said the company also had a strong relationship with its JV partner and gas offtaker TPDC, with the state company providing regular payments for the gas.