TORTOLA, British Virgin Islands. EastCoast Energy Corporation (“EastCoast Energy” or the “Company”) announces that it has signed an Interim Agreement with Songas Limited to supply up to 9.1 MMscf/d of natural gas to the Ubungo Power Plant in Dar es Salaam, Tanzania. It is anticipated that the Interim Agreement will be superseded by a 19-year supply agreement before the end of 2005.
EastCoast is currently selling approximately 7.7 MMscf/d at average loads to Songas, and indirectly to Tanzania’s power utility TANESCO. “This is the first of a number of natural gas supply agreements that we expect to sign with independent power producers and TANESCO in the coming years,” said Peter Clutterbuck, EastCoast’s President and CEO. “We see significant growth in demand for our gas to meet increasing electrical power needs in both Tanzania and elsewhere in East Africa. We are working closely with TANESCO to plan for future developments.”
The gas supplied to the six turbines at the Ubungo Power Plant (“UGT 1-6”) is produced from the Songo Songo gas field offshore Tanzania. Under the terms of the Songo Songo project agreement, The Tanzania Petroleum Development Corporation is entitled to supply Protected Gas to UGT 1-5. On average this amounts to 80.5% of the gas requirements of the six turbines (UGT 1-6) at Ubungo. The remaining 19.5% of the gas required by the Ubungo turbines is considered Additional Gas and is being supplied by EastCoast. This percentage represents the volume of gas required for UGT 6 in proportion to the total gas requirements of all six turbines. It is anticipated that the price of Additional Gas sold by EastCoast in Q4 will be between 2.32/mmbtu (US$2.11/Mcf) and US$1.96/mmbtu (US$1.81/Mcf).
EastCoast is also in discussions with TANESCO for the supply of gas to additional projects including 105 MWs of new generating capacity currently forecast to be operational in 2007 and an existing 100MW thermal plant to be converted to gas. These new loads will require up to 42 MMscf/d of Additional Gas supply and the construction of a third gas processing train on Songo Songo Island to supplement the existing two trains. The pipeline to Dar es Salaam has sufficient surplus capacity for this offtake. This new level of demand can be met from existing proven and probable Songo Songo reserves.
EastCoast is currently selling approximately 11.0 MMscf/d of Additional Gas in Tanzania (7.7 MMscf/d power and 3.3 MMscf/d industrial). The sales price for industrial customers currently exceeds US$7/Mcf, and the Company intends to continue to increase the size of this high value market. In this growing market, the Company’s exploration efforts are ongoing. EastCoast’s seismic survey over the Songo Songo licence area and Aminex farm-in area is now complete and approximately 900 kilometres of new data will be processed and interpreted before the year end.
EastCoast Energy Corporation Limited is a TSXV listed company focused on the exploration and production of Tanzanian natural gas and the sale of “Additional Gas” to markets in East Africa. The Company trades on the TSXV under the trading symbols ECE.SV.B and ECE.MV.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’s control, including the impact of general economic conditions in the areas in which EastCoast 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, 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 oil and gas operations, therefore EastCoast’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 will derive therefrom.
For further information please contact:
Peter R. Clutterbuck, CEO
+44 (0) 7768 120727
Nigel A Friend, CFO
+255 (0)22 2138737