TORTOLA, British Virgin Islands. EastCoast Energy Corporation (“EastCoast Energy” or the “Company”) announces that it has commenced industrial natural gas sales to customers in Dar es Salaam, Tanzania. An estimated 1.4 MMcf/d of natural gas is now flowing from Tanzania’s Songo Songo offshore field to Kioo Limited and Tanzania Breweries Limited through a ring distribution system constructed, owned and operated by EastCoast and its partner, Tanzania Petroleum Development Corporation (“TPDC”). The price for the sale of gas to industrial enterprises is calculated by reference to the Heavy Fuel Oil price in Tanzania and is initially expected to be in the region of US$5.20 — US$5.41 per Mcf.
Four other Dar es Salaam area companies have also signed contracts for EastCoast and TPDC to supply 1.3 MMcf/d of interruptible “Additional Gas” once their boilers have been converted to burn natural gas forecast for the end of the first quarter 2005. The gas being marketed by EastCoast is produced from the Songo Songo gas field which came onstream 20 July 2004. Currently connections to three of these additional customers have been completed and a fourth connection will be constructed in the first quarter of 2005.
Natural gas production at Songo Songo Island, approximately 200 kilometres south of Dar es Salaam, is operated by EastCoast Energy under contract to Songas Limited (“Songas”) and currently comes from four wells. The gas is transported by marine and land pipelines to Dar es Salaam where it is used primarily as fuel for the Ubungo electrical power plant. Natural gas required to fuel the power plant is classified as “Protected Gas” and is owned by Songas. Currently the “Protected Gas” required at Ubungo powers four gas turbines. Average current power plant gas use is approx 33 MMcf/d. This volume will increase when a fifth gas turbine is commissioned near the end of 2004. Surplus gas production from Songo Songo is called “Additional Gas” and is owned by TPDC and EastCoast Energy.
EastCoast Energy Corporation Limited is a Toronto Venture Exchange (TSXV) listed company focused on the production of Tanzanian natural gas and the sale of “Additional Gas’ to markets in East Africa. The Company was spun out from PanOcean Energy Corporation and began trading on the TSXV as a separate public company on 31 August 2004 under the trading symbols ECE.B and ECE.A. The company is headquartered in Tortola, British Virgin Islands and maintains its operations offices in Dar es Salaam, Tanzania.
Forward Looking Statements
This disclosure contains certain forward-looking estimates that involve substantial known and unknown risks and uncertainties, certain of which are beyond EastCoast Energy’s control, including: the impact of general economic conditions in the areas in which the Company operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, government intervention, third party contractual behaviour, the speed at which gas markets develop, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with operating a limited number of producing wells and gas related infrastructure, therefore EastCoast Energy’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, that EastCoast Energy will derive therefrom.
For further information please contact:
W. David Lyons, Chairman
+255 (0)22 2138737
Nigel A Friend, CFO
+255 (0)22 2138737