Tanzania gas project

From discovery to gas sales

An emerging gas sector

Major gas discoveries have been made offshore Tanzania and the country emerges as a potential large gas
producer in East Africa. In Block 2, Statoil together with partner ExxonMobil has discovered 21Tcf of gas.
If sanctioned, an LNG development could offer significant long term benefits to Tanzania mainly through
domestic gas, government revenues, employment and local content.

Statoil in Tanzania
Statoil has been in Tanzania since 2007 when it signed
a Production Sharing Agreement (PSA) for Block 2 with
Tanzania Petroleum Development Corporation (TPDC).
Statoil Tanzania is the operator with 65% working
interest while ExxonMobil is partner in the license
with a 35% working interest. TPDC has the right to
participate with a 10% working interest in the licence if
commercial volumes are proven. Statoil Tanzanias main
office is in Dar es Salaam, with a liaison office and an
offshore support base in Mtwara.

Block 2 map with discovery areas

Successful drilling operations offshore Tanzania

Since the start of the drilling campaign in Block 2 in 2011, Statoil and co-venturer ExxonMobil have achieved
extraordinary results offshore Tanzania.
A drilling campaign comprising of 12 exploration and appraisal wells drilled over less than three years has
resulted in seven discoveries with more than 21 tcf of gas (in place volumes). The wells were drilled in water
depths of approximately 2,400 2,600 meters in a frontier area where no wells had been drilled prior to
2010. One of Statoils high impact discoveries, in Tanzania, Piri-1, was the second largest gas discovery in the
world in 2014.
The gas discoveries hold the potential to lay the foundation for a major LNG project in Tanzania.
Following the successful exploration campaign, the Block 2 licence is now approaching a more mature stage.
If the project is sanctioned for development, extraction of the gas resources will be done through a subsea
development. This will comprise reservoir extraction through subsea wells, a subsea production system,
pipelines to an onshore LNG plant, LNG exports to international gas markets as well as gas transmission to
the domestic market.
The project will be technically challenging and demanding, but with significant deep water and subsea
experience, Statoil and partner ExxonMobil are well prepared for taking on the challenges and developing the
project in a safe and efficient manner.

The Tanzania Domestic Gas

Statoil will supply up to 10% of the gas produced for use in the domestic market (DSO) in gaseous state. This could
potentially double Tanzanias current domestic gas supply. Domestic use of gas should be sustainable and provide a
stable long term offtake of the gas. Further, the domestic gas price should be market-based and create value for all
stakeholders. Statoil will work closely with TPDC and MEM to deliver gas into the domestic market.

What is gas and what can

it be used for?
The natural gas discovered in Block 2 is mainly methane.
Methane can be used for purposes such as domestic
appliances, electricity production, and in industries such
as fertilizer, cement and petrochemicals. It can also be
used as fuel for vehicles and vessels.

Is methane dangerous?
Methane is a natural gas. It is normally not toxic.
However, if ignited, it can cause explosions. Statoil has
high Health, Safety and Environmental (HSE) standards
and a sharp focus on preventing gas leaks. During our
operations we have equipment in place to prevent and
detect leaks.

Joint LNG project in Tanzania

The Government of Tanzania has requested the partners in Block 1 & 4 and Block 2 to cooperate in the
development of a joint onshore LNG facility. Such facility will receive gas from all blocks to capture synergies
and associated cost savings. As a response, an integrated project team with representatives from all the licence
holders of Block 1, 2 and 4 has been established with the purpose of developing a common onshore LNG
facility. The offshore developments remain as independent projects operated by Statoil and BG respectively.
The capital intensive joint LNG export facility will require a dedicated commercial and fiscal arrangement
implemented through specific legislation, as it brings together several blocks and investors into one project.
This is common practice for LNG projects in many countries.
These terms and conditions should be captured in a Host Government Agreement (HGA) between the
government of Tanzania, TPDC and the International Oil Companies (IOCs) and need to be in place before the
next phase of the project can be initiated, the Front End Engineering and Design (FEED).

LNG transportation

What is Liquefied Natural Gas (LNG)?

LNG is natural gas that has been converted to liquid form by cooling it down to minus 163 degrees Celsius for ease of
storage and transportation. Through liquefaction the volume is reduced by a factor of 615 compared to natural gas in
gaseous state. Methane usually accounts for about 85-95% of LNG. LNG is odourless, colourless, non-corrosive and
non-toxic. LNG offers a unique solution for transporting natural gas across long distances.
The foundation for monetizing the deep water gas discoveries in Tanzania is an LNG export project. The global LNG
market provides scale and access to established international markets required for developing large deep water gas
discoveries such as Block 2. Tanzanias strategic location between markets in Asia, Europe and South America increases
the optimisation potential and ability to profit from relative market price differences.

Extensive work needed to proceed

The LNG Project is still at an early stage. Significant work needs to be done to clarify if a commercial
development is possible. No final investment decision (FID) is yet taken. To bring gas from deep-water off the
coast to shore is challenging and costly. This can only be done based on a robust business case and extensive
planning to develop cost effective onshore and offshore solutions. This is a comprehensive task and it will take
years before all the technical work is finalized, necessary regulatory framework is agreed and implemented and
until the first gas is eventually produced.

2-5 years
Exploration
& appraisal

2-6 years
Subsurface
& project
development

FID

4-6 years
Execution and
production start-up

10-30+
Production and marketing

A typical illustrative schedule of the stages of an LNG project.

If sanctioned an LNG development would provide

significant benefits for Tanzania
The development would be the first of its kind in Tanzania, and would be by far the largest investment project
to date in the country. The project could transform the Tanzanian economy as it will offer significant long
term benefits to Tanzania mainly through domestic gas, government revenues (direct income and taxes),
employment and local content as well as contribution to GDP and favourable trade balance.
By end of 2014 the partners in Block 2 have spent over 1,8 billion on its operations in Tanzania. Around 600
Tanzanians have been employed directly and indirectly through various suppliers and vendors.
Statoil has taken a proactive approach to local content in Tanzania, and has already created a significant
footprint. More than 75% of current spend is with Tanzanian registered suppliers. This represents over 1200
MUSD in the period between 2010 and 2014.
Going forward the Tanzania gas project also represents opportunities for a wide range of Tanzanian suppliers.
Statoil is working on several initiatives to support the development of the local supply industry to ensure an
optimal level of local participation.
To prepare for the potential development of the LNG project Statoil invests in education and training particularly
within science disciplines. Statoil works hand in hand with local organisations to develop long term capacity
building plans to ensure adequate supply of skilled and competent labour.
5

Statoil is committed to

Making decisions based on the way they affect our interests and the interests of the societies in which we operate

Respecting human rights and labour standards

Ensuring transparency and anti-corruption

Contributing to local content by developing skills and opportunities in the societies in which we operate

Graduates from Statoil scholarship program

Heroes of Tomorrow
In pursuit of enhancing local content in Tanzania,
Statoil launched the Heroes of Tomorrow programme,
a business plan competition aiming at encouraging
entrepreneurial spirit among the youth in Mtwara.
Statoil believes that due to the oil and gas activities
that are taking place in Mtwara business opportunities
are emerging that could drive individual as well as
community success.

Five finalists of the 2014

Heroes of Tomorrow Business Competition

About us
Statoil is an international energy company with operations in 36 countries. Building on more than 40 years of experience from
oil and gas production on the Norwegian continental shelf, we are committed to accommodating the worlds energy needs in
a responsible manner, applying technology and creating innovative business solutions. We are headquartered in Stavanger,
Norway with approximately 23,000 employees worldwide, and are listed on the New York and Oslo stock exchanges.

Discoverer Americas

Statoil Tanzania Office

Office address:
Statoil Tanzania AS

P.O. Box 713, Dar Es Salaam
Visitor address:
Plot 1403 Bains Singh Avenue
Masaki, Dar Es Salaam
Telephone:
+255 22 2923402 / + 255684 226203
Statoil Mtwara Liaison office
Visitors address:
Telephone:

Msemo Road
+255685 742845 / + 255689 103380

For more information about Statoil, please visit:

www.statoil.com

COM - 150078. 2015. Photo: Statoil

If you have any queries about Statoil activities in Tanzania,

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