Aminex PLC has signed a gas sale agreement (GSA) with the Tanzania Petroleum Development Corporation (TPDC) for its Kiliwani North gas field, moving the company into its production phase, Aminex announced on Wednesday.
Gas will be sold at $3 per mmbtu and the price will be adjusted annually by applying an agreed United States Consumer Price Index.
Gas from Kiliwani North will be supplied to the recently completed Songo Songo gas processing plant. Final well preparations, which are ongoing, are close to completion prior to testing and commissioning of the new plant.
“The Kiliwani North Gas Sale Agreement represents a major milestone as the company’s first commercial production in Tanzania,” Aminex Chief Executive Jay Bhattacherjee commented.
The start of commercial operations will be mutually agreed between TPDC and Aminex after testing and commissioning has been completed.
Participants in the Kiliwani North Development Licence are Ndovu Resources (Aminex) 55.575 per cent (operator), RAK Gas 23.75 per cent, Bounty Oil & Gas 9.5 per cent, Solo Oil 6.175 per cent and TPDC 5 per cent.The Kiliwani North GSA allows for the expected depletion of production from the field over time. In each contract year TPDC will be required to purchase, take delivery of or pay for a pre - determined volume of gas.
“Achieving this agreement has been a long time coming but the final version is comprehensive and will allow production to commence with clarity and security,” Bhattacherjee added.
“We are grateful to shareholders for their support and patience. With a mix of production from Kiliwani North and upcoming appraisal and development drilling in the highly prospective Ruvuma basin, we consider Aminex to be well placed for further growth.”
In the event that TPDC elects not to take delivery of the pre-determined volume, it will pay for the equivalent of 85 percent of the agreed commercial rate of gas to be supplied, adjusted each year in accordance with the terms of the GSA.
During the testing and commissioning phase, the TPDC will be invoiced for gas produced at the end of each month and will be required to pay on invoice.
Each month, the TPDC will be required to pay one month’s revenues in advance, secured with a letter of credit issued by the Tanzania Investment Bank, the statement issued by Aminex PLC and seen by The Guardian states.
It further states that monthly revenues will be calculated based on actual production, and adjustments will be made at the end of each month for any discrepancy between estimated and actual throughput.
“The gas price is not linked to any commodity price so is unaffected by current commodity market conditions,” it says.
Gas revenues will be invoiced and payable in United States Dollars and the gas delivery point will be at the outlet flange of the Kiliwani North wellhead. By selling the gas at the wellhead, the joint venture partners will not be responsible for pipeline transportation and processing fees.
Shareholders are reminded that Solo Oil plc retains an option to purchase a further 6.5 per cent stake in the KNDL (before TPDC back - in) for a period of 30 days following signing of the GSA, according to the terms of an agreement previously advised to shareholders.
As previously announced, Bowleven and Aminex have signed a Heads of Terms agreement for future cooperation in Tanzania, including Bowleven’s participation in Kiliwani North, which remains subject to shareholder and all regulatory approvals.
Aminex is an Africa-focused oil and gas company with near term production, development and high impact exploration, premium listed on the London Stock Exchange and primary-listed on the Irish Stock Exchange.
Fully funded to production, and with an experienced management team, Aminex has a world class asset base with proven large resource potential and a route to monetisation in 2015. The company continues to deliver on its strategy - on time and on budget.
SOURCE: THE GUARDIAN
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