Tanzania Gas Pipeline Built, But Not Ready to Start

A pipeline connecting offshore natural gas fields to Tanzania's commercial capital Dar es Salaam is complete, but technical setbacks will keep it from going online until November, officials said on Tuesday.

Tanzania estimates it has at least 53.28 trillion cubic feet (tcf) of recoverable natural gas reserves off its southern coastline. Discoveries offshore of Tanzania and Mozambique waters have led to predictions the region could become the world's third-largest exporter of natural gas.

The 532 km (330 mile) pipeline and gas processing plants, financed by a $1.225 billion Chinese loan, were initially expected to be completed last year.

"Construction of the pipeline is 100 percent complete," Badra Masoud, spokeswoman for the energy and minerals ministry, told Reuters. "There is some additional work that remains to be done as a result of pre-commissioning inspection tests on the pipeline.

Masoud said construction of two gas processing plants that are part of the pipeline's infrastructure was 96 percent complete.

Construction of the land and marine pipeline was expected to cost $875.7 million while the processing plants were being built at a cost of $349.6 million, according to Tanzania government figures.

Oil explorer Wentworth Resources said in a statement on Tuesday it was informed about completion delays by the state-run energy regulator Tanzania Petroleum Development Corporation (TPDC), but expected the gas pipeline to be fully operational within four months.

"Whilst completion and commissioning delays will impact the timing and amount of expected cash flow generated in 2015, we see clear, tangible progress towards first gas being delivered into the new pipeline in the summer and look forward to ramping up volumes of gas supply," Geoff Bury, Wentworth's managing director said in the statement

However, Tanzania's energy and minerals ministry said the July deadline for commissioning of the gas pipeline was unlikely to be met.

"It was initially thought that the pipeline would be ready to deliver gas in July, but we think that the commissioning will now be done in November," said Masoud.

She said the government hopes to save around $1 billion a year in oil imports for electricity generation after the completion of the pipeline by switching to gas-fired power plants.

(Reporting by Fumbuka Ng'wanakilala; Editing by Edith Honan and William Hardy)