Unfortunately, I view Songo gas as a completely lost cause for years to come. I read this a while ago, but hoped KEY would come out with something positive to counteract it. They haven't - Dominion might do it for them, but that's a wing and a prayer. I'm sorry I ever had anything to do with this company, but anyway...
I'd advise all KEY holders who still have any hope that gas from Songo Songo will be commercialized in the near future, to read this presentation from ORCA very carefully:-
If, having read that, you think still KEY's Songo gas is going anywhere anytime soon, you and I are not looking at the same presentation.
My key points from it:-
- You can only provide electricity and/or gas to customers who have wires/pipes installed. - Tanzania doesn't have much of a local power or gas grid in their cities. - Tanzania has a substantial (relative to their grid) hydro-electric capacity. - Gas helps in the dry season, but hydro is favoured in the wet season. - Existing supplies via the Songo Songo pipeline meet existing needs. - In order to try and create more demand for their gas, Orca has had to start building their own local gas network in Dar es Salaam, because the government hasn't done it. - Orca operates or owns the Songa island gas processing plant, the pipeline, the compression station at DeS. They will get first crack at anything new. KEY/Aminex will get what (if anything) Orca can't supply. - Orca could connect more new wells to the pipeline (and are planning to do so), however there is no market for that extra gas, unless they build more local gas network pipes in DeS.
I'm sure you get the picture. I also thought of this metaphor to describe the situation. A polling company went out and visited 100,000 families living in mud huts in the country of Insania. They asked them whether they liked using a toilet pit over in the scrub, or whether they would prefer a flush toilet inside their mudhut. 97% of respondents indicated a preference for the indoor toilet.
The survey company concluded that there was an overwhelming demand for flush toilets in Insania. As a result of this survey, Royal Doltheads (a leading supplier of porcelain toilets) set up a shiny new factory in Insania's capital city.
The problem should be obvious. However, it seems that problem was not so obvious to KEY's management, when they decided to make Tanzanian gas one of their trophy projects. As a result, a whole lot of money was taken over behind a tree and buried in a pit toilet.
Bring on Italy (sometime before 2020).
KEY Price at posting:
9.3¢ Sentiment: None Disclosure: Held
(20min delay)
