Statoil and ExxonMobil (XOM.N) found 3 trillion cubic feet (Tcf) gas in the Lavani well 2,400 meters under the sea, and added 1 Tcf of gas to the nearby Zafarani discovery, giving them around 9 Tcf of gas, Statoil, the block's operator said on Thursday.

"We would need another Lavani to feel comfortable we have the gas for commercial development," Tim Dodson, Statoil's exploration chief told Reuters. "But I expected more gas."

"The Tanzanian government's expectation that development would start in seven years is not completely unreasonable," Dodson added.

The discovery confirms East Africa's status as one of the world's fastest growing gas hubs with the U.S. Geological Survey estimating that 253 trillion cubic feet may lie off Kenya, Tanzania and Mozambique, relatively close to Asia's lucrative LNG markets.

Anadarko Petroleum (APC.N) earlier estimated its reserves off northern Mozambique at 50 trillion cubic feet while Eni (ENI.MI) said its neighboring exploration block may have 52 trillion cubic feet of gas.

"This is a highly significant discovery for Statoil," Trond Omdal, an analyst at Arctic Securities said.

"It would cost at least $10 billion to develop the field, and gas would not come to the market sooner than after 2020."

Dodson said Statoil would almost certainly opt for some sort of liquefied natural (LNG) gas solution but declined to provide a development cost estimate.

"Developing this will be quite a challenge given that in East Africa, like in Tanzania and Mozambique, there's limited infrastructure in place," Dodson said. "So it's going to take a little bit longer than if we had the infrastructure in place."

He added that Statoil was now in the process of securing rigs and making plans for further exploration activity.

"We estimate a value of the discovery plus the upgrade on the Zafarani discovery of NOK 1.3 per share," Swedbank First Securities said in a note. "We assume a fair share price reaction would be NOK 0.8-1.0 per share," it added.

The discovery confirms Statoil's recent track record for solid upstream success after it has made big finds in the mature areas of the North Sea, the Arctic Barents sea, in Brazil and Tanzania.

Statoil operates the license on 5,500-square-kilometre Block 2 on behalf of Tanzania Petroleum Development Corporation and holds a 65 percent stake while ExxonMobil Exploration has 35 percent.

Statoil shares were little changed 135.8 crown a shares at 0842 GMT.

(Additional reporting by Nerijus Adomaitis; Editing by James Jukwey and Elaine Hardcastle)

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