DAILY NEWS Tuesday, September 9, 2008 I 5- __-----' "----------"--- ---, -----'--- 1.......-..::.

BVSINESSSTANDARDNEWS &.BRIEFS

...........as allowed to export natural gas

CANADA'S Artumas Group Incorporation (AGI) has said that it had received approval from lanzania to export compressed natural gas to clients in Kenya.

The Norwegian-listed oil and gas firm discovered a gas deposit in Mnazi Bay in Mtwara Region. which has about 2 trillion cubic feet of proven gas deposit or gas in place.

Some of the, gas already generates small amounts of electricity in Mtwara.

"Tanzania (government) ha5 given approval to Ar­tumas to finalise negotiations with the relevant parties for the export of compressed na.tural gas (CNG) to olf­take clients in Mombasa. Kenya." the company said in a statement on its website.

The approval allows AGI to move forward to con­clude the relevant Project Agreements. including long­term Gas Sales Agreements with the off-take customers and ltanspor:tation Services Agreement with the CNG

shipper. Conclusion of these commercial Agreements will

underpin the current planning activity in support of commencement of the drilling program in 4th Quarter 2008.

Stephen w: Mason. President & CEO states. "During the past year Artumas has worked in close cooperation and collaboration with its working interest partner. Tan­zania Petroleum Development Corporation (TPDC) and the Government of Tanzania to detennine the optimal use of the large natural gas resource base located in the Tanzania part of the Ruvuma Basin.

"The commercialization strategy involves balancing Tanzania domestic requirements with high-value export opportunities.

"The approval for export of CNG reflects the vision and foresight of the Government of Tanzania and is fur­ther evidence of the confidence held by the government in the abilities of AG] to execute on its commitments."

Natural gas has also been discovered in three other areas. Of these deposits. Songo Songo island off the eastern coast is also in commercial prodnction.

----------------_...._----------,-,---------,---,­

ELECTRICITY turbines.

lnDation hurts Kenya shilling

THE Kenya shilling has recently been losing ground to major currencies including the Uganda and Tanzania shillings.

The depreciation comes at a time when the local unit. which has traditionally been bullish against neighbouring countries' units, has been stable to the US dollar since the 5afaricom initial public offering (lPO) in May.

Analysts point at inflation. which has reversed the shillings gains. reaching 27 per cent in July. The pre­vious peak was at 3].5 per cent in May, before reced­ing to 29.3 per cent in June.

Unlike a strong currency and a stable inflation rate. which raise a country's purchasing power, Kenya is now in. a weaker I:rad1ng 'Position with inflation eroding the shilling's purchasing power and forcing its slide in the international market.

It is feared that Kenya's returns from exports to Uganda, its leading tra,ding pattner, could be hurt sub­stantially by the depreciation of the sllilling.

"For a long time. Kenya has benefited from export­

ing manufactured products to Uganda backed by a bullish unit,

"A we~ing local currency is bound to affect re­turns from exports." said Mr Benson Kaburu. a senior dealer at Standard Chartered Bank.

Pressu~. [rom the escalating prices of oil. which is feeding the rising inflation, has led to price increases of most prod cts.

"With the rising prices of most products, importers from TIIllZiJllia and Uganda might opt to import less hence reducing the returns even further," said Mr Fri­day Mwafuga, the head of trade at Co-operative Bank.

However. investors from Tanzania and Uganda have something to smile about as the fundamentals are turning in their favour.

For instance, an investor coming from either Tan­zania or Uganda will now require to pay less of their local units while purchasing the Kenyan shilling. meanin aJI ioveslor from either countries can buy more in Kenya for IIle same amount of money.

Uganda and Tanzania are both benefitting from a relatively stable inflation outlook. III Uganda the an­nual h !lJQe1nfl1ltiolLstood at 13.7 per cent as of Ju- . ly whereas the he~dline monthly inflation in Tanzania was 9.5 per cent in July.