East African region has great potential for collaboration in the building oil and gas infrastructure. Tanzania has gas resources that is being shared with her neighbors like Uganda and Kenya. One such opportunity is the realization of the proposed Kenya and Tanzania gas pipeline project.
As an investor, you might be very interested in such a project. This is because you can support this oil and gas project by providing goods or services during construction. Maintenance of such a gas pipeline is also an opportunity if you provide such services.
Tanzania’s President Samia Suluhu visited Kenya for a two-day official visit in April, 2021. It was the first visit for her as president. She received warm reception from her host, the Kenyan President Uhuru Kenyatta.
It is during this visit when the discussions of the gas pipeline from Dar es Salaam to Mombasa via Tanga are being discussed. The two leaders agreed to speed up the groundwork required to make this project a reality.
To me, this is a good development and provides a great opportunity for the two countries in building shared gas infrastructure.
How Long is the Kenya – Tanzania Gas Pipeline
The natural gas pipeline from Dar es Salaam in Tanzania to Mombasa in Kenya is 600km in length. This is equivalent to 373 miles.
It is worth noting that discussions for this gas pipeline started back in 2011.
However, it had taken a back seat due to strained relations between the two countries over various issues.
Estimated Cost of the Gas Pipeline from Dar es Salaam to Mombasa
Building oil and gas infrastructure is not cheap.
If you look at major oil or gas pipelines, they do require a huge investment to turn into reality. A case in point is the East African crude oil pipeline from Hoima in Uganda to the port of Tanga in Tanzania. It is expected to cost $3.5 Billion.
It is not different from the proposed gas pipeline from Tanzania to Kenya.
The estimated cost of constructing the Kenya-Tanzania gas pipeline from Dar es Salaam to Mombasa is $1.1 Billion.
Dar es Salaam to Mombasa Gas Pipeline Route
The construction of the Kenya-Tanzania gas pipeline will provide a great opportunity to build stronger trade ties between the two countries.
This project’s route will start at Dar es Salaam in Tanzania, through Tanga to Mombasa city in Kenya.
Kenya – Tanzania Gas Pipeline MoU
Kenya and Tanzania have signed a deal in Nairobi that could revive plans to export gas to Mombasa from Dar es Salaam via a new pipeline.
During her state visit to Kenya last week, Tanzania’s President Samia Suluhu Hassan and her Kenyan counterpart Uhuru Kenyatta signed off on a preliminary agreement covering the transport of gas from Tanzania for use in power generation and, potentially, for cooking and heating.
Local reports put the costs of the 600-kilometre pipeline at about $1.1 billion.
The deal is part of a longer-term plan to expand infrastructure links between the two East African nations. I have written on the upstream oil and gas industry in this region, and you can read it here.
Related: Oil and Gas Industry in East Africa
Commenting on the agreement, Hassan said: “We have agreed on the need to ease the transportation of key energy resources and have reached one such understanding on the transportation of gas. What we need to do now is start implementing the project.”
The memorandum of understanding on co-operation in natural gas transportation allows the nations’ energy ministries to begin talks on the design, cost and logistical issues related to the pipeline.
“We have agreed on ways of tapping Tanzania’s natural gas,” added President Kenyatta.
“That should ease the cost of power to ensure that our industries can access cheaper energy that is also environmentally friendly,” he told reporters.
Natural Gas in Tanzania – Associated Projects
Tanzania has an estimated 57 trillion cubic feet of natural gas.
Much of the offshore gas is being taken to liquefied natural gas plant at Lindi which is in planning stages. This is according to a proposal by Shell and Equinor.
Importantly, some of the gas is for domestic use and also exported to neighboring countries.
Tanzania also hosts many undeveloped onshore gas finds that could potentially underpin piped gas exports to Kenya, as well as to Uganda.
This a proposal that suggests a 1450-kilometre gas line could run along the same route as the planned East African Crude Oil Pipeline (EACOP).
The proposed Dar-Mombasa pipeline was first mooted more than a decade ago when it was planned to supply gas from the Songo Songo and Mnazi Bay fields.
A 207-kilometre, 16-inch pipeline currently links Songo Songo with Dar es Salaam, while a separate 487-kilometre, 36-inch line links Mnazi Bay with the country’s commercial capital.
Rising Energy Demand in East Africa
The LNG project comes a decade later after initial plans, which valued the Kenya – Tanzania gas pipeline at $630 million, failed to take off.
In 2011, Kenya announced plans to build $500 million LNG terminal at the port city of Mombasa to diversify sources of electricity to meet rising demand.
An East African Community study at the time showed that a pipeline to move natural gas from Dar es Salaam to the terminal would cost up $630 million.
Tanzania has so far discovered more than 57 trillion cubic feet of natural gas and is engaging international oil firms on the terms of developing a $30-billion LNG project.
Tanzania has said it plans to export surplus electricity to energy-starved nations in eastern and southern Africa once it has boosted its generation capacity.
Foreign oil and gas companies Equinor, alongside Royal Dutch Shell, Exxon Mobil and Ophir Energy and Pavilion Energy, plan to build the onshore LNG plant in Lindi region.
The international oil companies will develop the project in partnership with the state-run Tanzania Petroleum Development Corporation.
Gas to Power Potential in East Africa
One of the great uses of gas is in the generation of power. This is something that East African countries can tap into using he huge gas resources.
As mentioned above, Tanzania has huge offshore gas resources. This is forming the potential or foundation for a gas-to-power project.
According to a report by African Energy Chamber, power generation on the African continent will increase by 25%, 55%, and 141% of 2020 baseline levels. This is going to reach 1,057TWh, 1,138TWh, and 2,047TWh by 2025, 2035, and 2040, respectively.
The bulk of this new supply is natural gas–fired or LNG-fueled. There will be modest growth in shares of renewables and decentralized off-grid power.
It also noteworthy that Africa’s energy transition will likely “emphasize energy security (access) and energy poverty (affordability)@. Climate change considerations must consider the economic challenges that Africans face.
“Curbing emissions is a noble and essential goal. The problems associated with climate change aren’t something we can look on from afar and let someone else worry about. Considering Africa to be more vulnerable to the effects of climate change than many other areas, especially since so much of the population depends on regular rainfall to grow food crops,” said NJ Ayuk, AEC executive chairman.
“We also understand that it’s our responsibility as global citizens to participate in energy transition. Within reason, that is.”
He added: “Energy transition, the so-called path from fossil-based to zero carbon, cannot be applied with a broad brush. What will work in Norway isn’t always feasible in Namibia. What makes for sensible policy in London isn’t necessarily pragmatic in Lagos.”
A key reason that the region is focusing on gas-to-power is that its gas industry is showing enormous potential.
Kenya and Tanzania Gas Pipeline Project – Gas to Power Opportunities
The continent was estimated to have between 527–558 trillion cubic feet (Tcf) of gas as at the end of 2019, making Africa the fourth-largest gas reserves holder in the world after North America (7.5 percent of proven global reserves), according to BP and OPEC statistics.
Over 90% of all recent gas discoveries in Africa are by nascent players like Mozambique, Tanzania, Mauritania and Senegal.
These changes highlight a potential new age for gas supply diversification in Africa as several new producers come on board.
Gas power already makes up 39%, the largest share of Africa’s supply mix. Following these are coal at 29%, hydro at 15%, oil at 10%, and nuclear 2% from a single plant.
Renewables are holding a growing 5% share, but most existing projects are centered in Morocco, Egypt, South Africa, and Kenya.
Another reason the region is banking on gas is that the industrial sector led sectoral consumption (41%). Following these are residential (33%), commercial and public services (18%), and agriculture (4%).
The report notes off-grid power could resolve some of that growing demand, particularly in the residential and agricultural sectors.
Off-grid projects through stand-alone systems and mini-grids could provide almost 50% of the new electricity access. This represents the least cost solution to connect about 450 million people on the continent (41% of the population) toward 2030.
Conclusion
In conclusion, the agreement to construct this gas pipeline is a great step towards energy prosperity in East Africa.
Sharing energy resources is part of the long term strategy of countries not only in East Africa, but the entire African continent.
“That is a long-term project. Today we have signed an agreement and what remains is implementation. We have agreed on the need to ease the transportation of key energy resources. That is why we reached one such understanding on the transportation of gas. What we need to do now is start implementing the Dar es Salaam-Mombasa gas pipeline project,” said president Suluhu Hassan.
The Kenya and Tanzania gas pipeline project is going to strengthen their ties.
Entrepreneurs and investors from across the two countries are also going to be collaborating more.
