EastCoast Energy Begins Natural Gas Sales in Tanzania

EastCoast Energy has commenced industrial natural gas sales to customers in Dar es Salaam, Tanzania. An estimated 1.4 mmcf/d of natural gas is now flowing from Tanzania's Songo Songo offshore field to Kioo Limited and Tanzania Breweries Limited through a ring distribution system constructed, owned and operated by EastCoast and its partner, Tanzania Petroleum Development Corporation ("TPDC"). The price for the sale of gas to industrial enterprises is calculated by reference to the Heavy Fuel Oil price in Tanzania and is initially expected to be in the region of US$5.20 - US$5.41 per mcf.

Four other Dar es Salaam area companies have also signed contracts for EastCoast and TPDC to supply 1.3 mmcf/d of interruptible "Additional Gas" once their boilers have been converted to burn natural gas forecast for the end of the first quarter 2005. The gas being marketed by EastCoast is produced from the Songo Songo gas field which came onstream 20 July 2004. Currently connections to three of these additional customers have been completed and a fourth connection will be constructed in the first quarter of 2005.

Natural gas production at Songo Songo Island, approximately 200 kilometres south of Dar es Salaam, is operated by EastCoast Energy under contract to Songas Limited ("Songas") and currently comes from four wells. The gas is transported by marine and land pipelines to Dar es Salaam where it is used primarily as fuel for the Ubungo electrical power plant. Natural gas required to fuel the power plant is classified as "Protected Gas" and is owned by Songas. Currently the "Protected Gas" required at Ubungo powers four gas turbines. Average current power plant gas use is approx 33 mmcf/d. This volume will increase when a fifth gas turbine is commissioned near the end of 2004. Surplus gas production from Songo Songo is called "Additional Gas" and is owned by TPDC and EastCoast Energy.