Industrial gas price up 11%

The average industrial gas price went up by 11 per cent in the second quarter of this year, while production fell by 5.0 per cent in the same period.

The Orca Exploration, PanAfrica Energy’s parent company, said the average gas price rose to 8.60 US dollars per standard cubic feet (Mcf) in comparison to the first quarter of 7.78 per Mcf.

The Orca chairman and Chief Executive Officer, Mr W. David Lyons, attributed the increase to applying terms agreed with the largest industrial off-taker of natural gas which took effect in January this year.

He added, “Together with the sales mix which resulted in two industrial customers with relatively low gas prices accounting for 61 per cent of the industrial sales volume for the quarter.”

However, in quarterto- quarter comparison, the largest industrial and power sectors gas supplier, said the average industrial gas price decreased by 15 per cent to 8.60 US dollars per Mcf from 10.14 per Mcf of quarter-two 2012.

The firm also said in a press release over the weekend that during the second quarter of this year, additional gas production averaged went down by 5.0 per cent to 58.4 million cubic feet per day over the first quarter.

The CEO said Songo Songo wells continued to produce at capacity within the limits of the current infrastructure and the decline was associated with normal depletion of the reservoir.

“These limits will remain until the new infrastructure is in place and operational,” Mr Lyons said.

The power sector price for the quarter under review was up 2.0 per cent over the first quarter price to 3.55 US dollars Mcf. “Slightly lower volumes to the power sector achieved a marginally higher price under the terms of the PGSA (Portfolio Gas Sales Agreement),” the CEO credited the increase.

In the same quarter that ended this June, the gas firm posted a loss of 6.8 million US dollars compared to profit of 3.0 million US dollars of first quarter 2013. During the quarter under review, Orca completed additional reservoir modeling to assess the deliverability of the Songo Songo Main and North Fields.

In its design for the National Natural Gas Infrastructure Project (NNGIP), the government had contemplated total Songo Songo Protected Gas and Additional Gas production of approximately 190 millions of cubic feet per day to feed the new pipeline under construction.

“In this context, management delivered a development plan to the Ministry of Energy and Minerals in mid-July to meet the anticipated demand for gas and infrastructure capacity,” Mr Lyons said.

The plan contemplates a combination of workovers and capital drilling to fully exploit the Songo Songo Main and North Fields. It would require initial reworking and recompletion of four wells through 2014.
Source: Daily News, reported by Abduel Elinaza, from Dar es Salaam, Tanzania
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