Statoil ASA, Norway?s state-owned oil producer, discovered as much as 3 trillion cubic feet of gas in a fifth find off Tanzania and is confident it will add more resources as it plans as many as 12 wells through 2015.

The new find at Statoil and partner Exxon Mobil Corp.?s Mronge-1 well in Block 2 brings total volumes in place to as much as 20 trillion cubic feet of gas, further strengthening plans for a LNG plant, the Stavanger-based company said in a statement.

Statoil would be ?surprised? if it doesn?t make more ?high-impact? finds off Tanzania, defined as holding more than 250 million barrels of oil equivalent or 100 million barrels net to the company, head of exploration in the western hemisphere, Nick Maden, said in a phone interview. ?I?d anticipate we?ll drill anywhere between nine and 12 wells between now and the end of the program.?

Statoil and BG Group Plc., operator of three neighboring blocks, are planning to build Tanzania?s first LNG plant for exports to Asian markets, where gas is priced higher than in Europe and North America. Tanzania has East Africa?s largest gas volumes after Mozambique.

?These are high value resources,? Maden said in the statement. ?The attractiveness is also demonstrated by a recent asset transaction in the neighboring block.?

BG?s partner Ophir Energy Plc last month sold a 20 percent stake in three blocks off Tanzania for $1.3 billion to Pavilion Energy Pte. Statoil declined to comment on whether it, too, was considering selling part of its 65 percent share in Block 2, where Exxon and Production Tanzania Ltd. hold the remaining 35 percent.

Based on Ophir?s sale, Oslo-based broker Swedbank First Securities said Statoil?s Mronge-1 discovery would be worth about 1 krone a share. Statoil rose as much as 1.1 percent to 141 kroner in Oslo and was at 139.4 krone as of 11:02 a.m.

?We are impressed by the company?s hit rate in the region and enormous volumes which are unlocked over the past few years,? Swedbank analyst Teodor Sveen Nilsen said in an emailed note to clients.

Statoil and BG have submitted a proposal for the LNG plant?s location to Tanzanian authorities and are expecting a decision by the end of the year. ?These things always take a little longer than you want,? Maden said, declining to provide details on the companies? proposal. Production could start in 2021 or 2022 and investments could be on ?the scale? of $20 billion to $30 billion, he said.

Statoil plans to drill five to six wells off Tanzania by the end of 2014, of which half will be exploration wells and half appraisal wells, and a similar amount in 2015, Maden said. Drillship Discoverer Americas will now appraise the Zafarani discovery from last year, the company said in a statement.

Source Bloomberg


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