London, UK | — British gas producer BG Group said on Thursday it had withdrawn from the development of a gas block offshore Tanzania after finding it was not worth further exploration.
Its partner, Ophir Energy in block 3 off the coast of the east African country said it had applied to the government to take over BG’s 60% interest and operations of the licence, bringing its stake in the block to 80%. Pavilion Energy, owned by Singapore investment company Temasek, holds the other 20%.
“We have applied to the government to relinquish (involvement). Our view of the resource does not support BG Group proceeding to the next phase of development,” a spokesman for BG Group said.
Ophir would make no payment to BG as a result of taking over the stake.
BG, the UK’s third-largest oil and gas producer, still holds a majority stake in the Kamba-1 well in Tanzania’s block 4. The block is estimated to hold 1.03-trillion cubic feet of gas, Bloomberg reports.
The gas group is under pressure to rein in costs and reshape its asset portfolio after a series of production downgrades that led to the resignation of its chief executive earlier this year.
BG plans to open a liquefied natural gas export terminal in Tanzania together with partners Ophir, Statoil and Exxon Mobil, which will be fed with gas from two other offshore blocks.
The Papa-1 well was the only one drilled in block 3, where gas was discovered in 2012.