Gas from Kiliwani North-1 (KN-1) field was processed at the Songo Songo gas plant and entered the Dar es Salaam pipeline for the first time on 2nd June 2016, Aminex (LSE: AEX) reports.
This follows the official commissioning of the gas plant and sub-sea pipeline, commenced on 1st June 2016.
Tanzania Petroleum Development Corporation (TPDC) is the sole buyer of the KN-1 gas after it signed a Gas Sales Agreement (GSA) with Aminex in 2015.
The GSA is a “take or pay” type agreement that provides a payment security mechanism to KN-1, a joint-venture between Ndovu Resources Ltd, subsidiary of Aminex, with 55.575% (operator), RAK Gas LLC with 23.75%, Bounty Oil & Gas NL with 9.5%, Solo Oil plc with 6.175% and TPDC with 5%.
The gas sale price will be USD3.00 per mmbtu or approximately USD3.07 per mcf. The price is not linked to any commodity price, so is unaffected by current commodity market conditions, but will be adjusted annually by applying an agreed United States Consumer Price Index.
Aminex plans to conduct a well test to determine the optimal flow rate, which will become the commercial production rate and the company intends to flow gas at this rate until there is a natural decline in production.
KN-1 is expected to produce gas at an approximate rate of 30m cubic feet per day (equivalent to 4,000– 5,000 barrels of oil per day).
Jay Bhattacherjee, CEO of Aminex, commented: “[…] The Company continues to focus on delivering production growth through Kiliwani and driving its appraisal and eventual development program at Ruvuma.”
“I visited the Songo Songo gas plant last week and was very impressed with the quality of the facilities and the progress being made with commissioning. I am encouraged by the work that has been undertaken by TDPC and Aminex, and expect that we will now reach the expected off take rate in the next few months.”, said Neil Ritson, Solo’s Chairman.
KN-1 counts with proved reserves of 45b cubic feet (bcf), however Bounty Oil & Gas estimates that the area has prospect resources of as much as 3.8tn cubic feet (tcf).
Tanzania’s latest estimated recoverable natural gas reserves reached 57tcf after Dodsal Group’s recent gas discoveries.