August 2, 2010 (Source: the EastAfrican)
– Abduel Elinaza

Canada’s Orca Exploration Group is planning to construct a natural gas pipeline from Dar es Salaam to Mombasa — a project that should significantly reduce the cost of energy, and hence the cost of doing business, in Kenya.

The 600-kilometre pipeline from Dar es Salaam through Tanga to Mombasa will carry natural gas from the Songo Songo island and from the Mnazi Bay gas fields in southern Tanzania near the border with Mozambique.

Orca Exploration chairman and chief executive officer David Lyons said last week that the group is currently carrying out a feasibility study at its own cost.

Mr Lyons said markets for natural gas are opening up in East Africa and there is significant potential demand from the power sector.

“We are looking forward to working with partners to increase throughput and extend the pipeline network to reach new markets. This will benefit not just Orca but also others who can then develop their gas discoveries in Tanzania,” he said.

Orca’s newly created infrastructure division, East Coast Transmission and Marketing, incorporated in the British Virgin Islands, is currently in discussion with potential pipeline expansion partners and is keen to have a significant East Africa finance component as part of the infrastructure project.

Orca has undertaken some preliminary engineering studies for the construction of the pipeline to Mombasa, which is likely to run along the coast — north to Mombasa and south to Mtwara to link up with the Mnazi Bay gas project.

Meanwhile, a parallel East African Community feasibility study for the same onshore route is currently ongoing. The EAC has engaged a team of consultants from Cowi (Denmark), Cowi (Tanzania Ltd) and Runji & Partners (Kenya) to carry out the study.

Senior energy officer at the EAC Peter Kinuthia, told The EastAfrican in Arusha last week that the study kicked off on July 5 and is due to be completed in February 2011.

Mr Kinuthia said the EAC will be holding the inception workshop this month (August) to firm up the methodology, with programme and consultation workshops to engage the stakeholders and the feasibility study to, among other things, package the project for the construction phase.

“The EAC is aware of the Orca undertaking and that the company is undertaking a similar study at its own cost,” he said.

Orca, with 16 years’ experience of working in Tanzania, is currently in discussion with potential pipeline expansion partners and has appointed Pierre Raillard, Orca’s in-country manager in Tanzania, to run the East Coast Transmission and Marketing division.

New division’s focus

Orca, which has undertaken some preliminary engineering studies for this section, said the new division will initially focus on twinning of the existing 207-kilometre onshore natural gas pipeline system transporting Songo Songo gas to Dar es Salaam from Somanga Funga, where the marine pipeline from the Songo Songo gas field connects to the mainland.

The currently installed pipeline has a throughput capacity of 90 million cubic feet per day; Songas Ltd is planning to expand the throughput to a peak of 140 million cubic feet per day by January 2013.

Orca is an international public company with a turnover of $8.2 million engaged in natural gas exploration, development and supply in Tanzania and oil exploration in Italy.

In his keynote address to the 3rd East African Community Investment Conference held in April this year, Ugandan President Yoweri Museveni said that transport and electricity are East Africa’s most pressing problems.

“The cost of electricity in East Africa is now five times more than in China,” President Museveni told hundreds policymakers, business leaders and international investors.

Droughts in East Africa in recent years have had a severe impact on the hydroelectric facilities in the region, with Kenya, Uganda and Tanzania in particular suffering from persistent power shortages.

The region is therefore seriously exploring alternatives to hydropower.