* Gas has saved economy more than $1.8 bln since '04 * Says interest high from industries, power utility
By George Obulutsa
DAR ES SALAAM, Oct 9 (Reuters) - Tanzania has saved more than $1.88 billion by using natural gas to produce electricity and run some industries, but needs to expand its infrastructure to meet demand, a senior official said on Friday.
Tanzania has made natural gas discoveries in four locations. Two of them -- Songo Songo off its eastern coast and Mnazi Bay in southeast Tanzania -- are in production.
Songo Songo had been pumping gas to Dar es Salaam since 2004, where it generates electricity and runs industries.
Yona Kilagane, managing director of the state-run Tanzania Petroleum Development Corporation, said Songo Songo's processing plant had a capacity of 90 million cubic feet (cf) per day and its pipeline could transport 105 million cf a day.
Demand stood at 108 million cubic feet per day, he said. "The demand here is much more and there's where the challenge lies -- in the processing plant's capacity and in the transportation to industries and power plants," Kilagane told reporters after making a presentation to legislators.
Since 2004 the east African economy had made significant savings by using natural gas instead of oil imports.
"The savings that the industries running on natural gas have made is about $110 million since 2004. Savings made to the economy by using natural gas to produce electricity is $1.88 billion," he said.
Songas runs Songo Songo through operator PanAfrican Energy, a subsidiary of Canada's Orca Exploration (ORCb.V) It also generates some 190 MW at its power plant in Dar es Salaam.
It said last year Tanzania will save up to $6 billion by 2024 by using gas for power generation.
Kilagane said Songas was in talks with Tanzania's Energy and Water Utilities Regulatory Authority to review its tariffs, which would then determine how it would expand its operations.
He said Songo Songo had a proven deposit -- gas in place - of 1.3 trillion cf, while Mnazi Bay had 2.5 trillion cf. Oslo-listed Artumas Group Inc (AGIC.OL), which has the Mnazi Bay licence, estimates the gas potential at 3 trillion cubic feet.
Kilagane said Kiliwani North and Mkuranga, Tanzania's other gas discoveries, were also being tested to determine their size.
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