Netherlands, Artumas Tanzania sign carbon offset deal

DAR ES SALAAM (Reuters) - The Netherlands and the Tanzanian arm of Canada's Artumas Group Inc have signed a carbon offset deal for 200,000 tonnes of greenhouse emissions to run for seven years, its embassy in Tanzania said.

AG&P Power Ltd, the Tanzanian branch of Artumas, discovered a gas deposit in Mnazi Bay in Mtwara, southeastern Tanzania, and is already using part of it to generate some 5 megawatt (MW) out of a 12 MW plant it has installed in the area.

The Oslo, Norway-listed oil and gas firm and the Tanzanian government are examining a feasibility study into the construction of a 300 MW gas-driven power plant and the building of over 500 km of high voltage lines from Mtwara.

"AG&P Power Limited signed a long-term agreement for the sale and purchase of carbon credits generated from the gas-to-power project in the Mtwara and Lindi region," the Dutch embassy said in a statement seen by Reuters on Friday.

"The project is expected to result in a reduction of 200,000 tons of greenhouse gas emissions over a period of seven years."

The deal was signed on Thursday.

The Mtwara Energy Project will cover an area of 24,000 square kilometers that is home to about two million people.

The Tanzanian government says Artumas has about 2 trillion cubic feet of proven gas deposit, or gas in place, while Artumas says it estimates the gas potential at 3 trillion cubic feet.

In an interview with Reuters in early October, Artumas Chief Executive Steve Mason said he expected the power project to be operational in 2012.

AG&P Power Limited and the Dutch government anticipate the project will be registered by the end of this year under the United Nation's Clean Development Mechanism.

In addition to the offset, the Dutch government is also providing some 22.5 million euros toward the transmission and distribution part of the project.

(Reporting by George Obulutsa; Editing by Daniel Wallis)