East Africans sign deal for first trans-border gas pipeline

Tanzania and Uganda have signed a historic deal that will give birth to the first trans-border natural gas pipeline in East Africa as the West Africa Gas Pipeline struggles to stay competitive.

The multimillion dollar deal was signed, August 25, at the end of a three-day Joint Permanent Commission Summit held in Kampala, led by Tanzania’s Foreign Minister Augustine Mahiga and Uganda’s Minister for Energy Irene Muloni, according to media reports.

The deal was a culmination of work that began during the first Tanzania-Uganda meeting held in April last year in Arusha, in which the two agreed on a number of memoranda and co-operation frameworks.

This will be the first trans-border gas pipeline in East Africa since the extraction of natural gas commenced in 2004 at the Songosongo Island in Tanzania’s southern region of Lindi.

Tanzania Petroleum Development Corporation set August 24, 2018, as the deadline for submission of tender documents for the consultancy services for feasibility studies.

Kapuulya Musomba, TPDC managing director told The EastAfrican that he was confident the pipeline construction would be successful given the expertise and experience gained through the construction and servicing of two pipelines – the 532km Mtwara-Dar es Salaam one and the crude oil pipeline that is underway.

He said that apart from carrying natural gas to Uganda, the pipeline will distribute the product along the route.

“About 10 to 15 Tanzania regions will benefit from the pipeline that will also serve as a catalyst for oil and gas exploration”, Musomba said.

Tanzania has a confirmed natural gas recoverable reserve of 57.5 trillion cubic feet. Musomba, did not reveal the source of funding for the project.

The gas to be transmitted is meant for power generation for industrial and domestic use. A half of Tanzania’s power generation depends on natural gas plants to generate 684.66MW, those using diesel 125.429MW and hydro 561.843MW.

The East Africa gas pipeline project might need to learn from the teething problems encountered by West Africa Gas Pipeline project.

At a recent roundtable of experts in Lagos, a big player in Nigeria’s natural gas upstream suggested it might well be worthwhile to think of privatising the West African Gas Pipeline.

This follows complaints of inefficiencies regarding how the pipeline is managed. Amid these complaints, Ghana has signed a 12-year deal with Russia’s Gazprom for liquefied natural gas (LNG) supply. Privatisation will lead to energy efficiencies in the West African sub-region one of the experts suggested.

Energy efficiency is critical to ensure safe, reliable, affordable and sustainable energy system for the future. It is the one energy resource that every country possesses in abundance and is the quickest and least costly way of addressing energy security, environmental and economic challenges. Nigeria has over 195 trillion cubic feet (TCF) of gas and experts have said this is probably an underestimation.

Boakye Agyarko, Ghana’s energy minister, and Kofi Sarpong, CEO of the Ghana National Petroleum Corporation, said they saved West Africa’s second largest economy over $1 billion in the new liquefied natural gas (LNG) transaction with Gazprom that will allow for the addition of up to 1,000MW to Ghana’s power supply.

“The gas that will come from Russia to Ghana’s regasification plant will cost $12 per standard cubic feet (Scf). I can put gas at $3 per Scf into the West African Gas Pipeline if it were efficiently managed and with an extra cost of $2 per Scf for transportation cost I can deliver gas to Ghana at $5 per Scf less than half of what the Russian gas will cost” Austin Avuru, CEO of Seplat, a Nigerian oil and gas exploration and production company said at the roundtable of oil and gas experts.

STEPHEN ONYEKWELU