Statoil ASA (OSE:STL, NYSE:STO, 65%) said a week ago that it together with partner ExxonMobil (NYSE: XOM 35%) got indications that Zafarani exploration well in the Block 2 licence offshore Tanzania contained natural gas. The company said that logging results now show this is a high impact discovery so far proving up to 5 Trillion Cubic Feet (~ 100 million tonnes or nearly one billion barrels of oil equivalent) of gas in-place.
This is the first well of Statoil in Tanzania and first Statoil operated discovery in East Africa. It immediately looks like the largest discovery in the country ever. Reservoir is off high quality, porosity and permeability. So far 120 metres of reservoir have been encountered and gas-water contact has not been established.
Executive vice president for Exploration Tim Dodson said in an interview posted on the company’s website that since no infrastructure is in place or established domestic market, the company needs to consider the market for the gas, with exports to Asia apparently being the most likely option. He says the companies need to start thinking either an onshore or floating LNG plant.
Production from the field might be ten years away still. The license covers approximately 5500 square kilometres at water depth of 2582 metres in Zafarani location. Statoil merely has a small presence in Tanzania at the moment with a couple workers in Dar es Salaam, so odds are the company will start adding into that. The stock is up 2% for the day.
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