Tanzania: Taifa Gas buys into Songo Songo field as Orca exits

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Tanzania’s Taifa Gas has inked an agreement to acquire a 49 percent stake in one of the country’s largest gas producers, PanAfrican Energy.

The deal will follow the exit of Toronto-listed Orca Exploration from PanAfrican Energy, which has been operating the Songo Songo gas field in Tanzania since 2001.

Orca Exploration announced on Monday that it has entered into a share purchase agreement with Taifa Gas and Amber Energy Investment.

Upon closing of the deal, Amber will acquire a 51 percent stake, and Taifa will take the remaining 49 percent of the shares.“The board therefore believes that preserving cash for shareholder distributions and divesting the Tanzanian business…is consistent with Orca’s long-stated objective of realising value from its Tanzanian business in an orderly and strategic way,” said the Toronto-listed firm in a statement.“The proposed transaction moves the Songo Songo asset to its next phase under a buyer group anchored by Taifa, a market leader in the importation, storage and safe handling, distribution and export of liquefied petroleum gas in Tanzania, and one whose established operating presence and sector focus are aligned with continued development of Tanzania’s domestic gas sector.”Energy shiftEast Africa has been a focus of hydrocarbon exploration after substantial deposits of crude oil were found in Uganda in 2006 and major gas reserves were discovered in Tanzania and Mozambique.

PanAfrican Energy supplies natural gas to industrial customers and for power generation for the national grid.“This deal is a pivotal moment for Tanzania. We have worked diligently over several years to make this a reality, and we are proud that Taifa will now play a significant role in shaping the future of our nation’s energy landscape,” said Rostam Azizi, the chairman of the Taifa Group.“Songo Songo creates real value for Tanzania – government revenues, domestic energy supply, employment, skills development, local procurement and long-term investment. Greater Tanzanian ownership builds on those benefits, deepens industrial capacity and keeps profit in the country, creating wealth for everyone,” he added.

Regional playTaifa Gas is the largest LPG supplier in Tanzania and has been supplying the Kenyan retail market via road.

PanAfrican Energy supplies natural gas to industrial customers and for power generation on the national grid.“This deal is a pivotal moment for Tanzania. We have worked diligently over several years to make this a reality, and we are proud that Taifa will now play a significant role in shaping the future of our nation's energy landscape,” said Rostam Azizi, the chairman of the Taifa Group.“Songo Songo creates real value for Tanzania – government revenues, domestic energy supply, employment, skills development, local procurement and long-term investment. Greater Tanzanian ownership builds on those benefits, deepens industrial capacity and keeps profit in the country, creating wealth for everyone,” he added.

Taifa Gas is the largest LPG supply company in Tanzania and has been feeding the Kenyan retail market via road.

The firm is building a multibillion-shilling cooking gas plant and storage facilities at the Port of Mombasa.

The Orca deal comes as Tanzania moves to sign, before June, a deal to construct a $42 billion (Sh5.4 trillion) liquefied natural gas (LNG) plant, with production set to start in eight years.

The mega gas project is expected to unlock 47.13 trillion cubic feet of natural gas reserves.

Along with those in neighbouring Mozambique, Tanzania’s project could help establish the East Africa region as an emerging LNG export hub to Asia.