Statoil Finds More Gas Offshore Tanzania

Posted by Joseph Keefe October 14, 2014

Norway's Statoil has found more gas offshore Tanzania, increasing its total for an eventual investment decision on a liquefaction plant with Britain's BG Group, which operates neighboring exploration blocks, it said on Tuesday.

Statoil found another 1.2 trillion cubic feet of gas in its block, taking its total volume in-place to 21 trillion cubic feet, or about 3.8 billion barrels of oil equivalents.

BG has also found about 15 trillion cubic feet of gross resources in nearby blocks.

"This discovery has proven the gas play extends into the western part of block 2, which opens additional prospects," Statoil said in a statement. "Opening up a new area will be key to continuing our successful multi-well program."

Although Statoil and its partner ExxonMobil have released few detail on the project, one of BG's partners earlier said that the volumes in place would support two 5 million tonne per annum liquefaction units, also known as LNG (liquefied natural gas) trains, with the final investment decision coming in 2016 and production beginning around 2020.

Statoil said that before an investment decision was made, it needed to ensure it had sufficient volumes, managed the technological and subsurface risk and ensured all legal and commercial requirements were in place for the investment.

Analysts have said they expect the project to go ahead with the partners focusing on rapidly expanding LNG markets in places such as South Korea and Japan.

Statoil is the operator of block 2 and has a stake of 65 percent. ExxonMobil holds the other 35 percent.

At 0735 GMT, Statoil shares were down 0.1 percent, outperforming a 0.7 percent fall by the European oil and gas index.

Statoil shares are down 15 percent in the past three months, weighed down by a drop in oil prices to a near four-year low.