Natural gas production company Wentworth Resources has recently announced that it has reached an agreement with Scirocco Energy to acquire its non-operated working interest in the Ruvuma gas asset in Tanzania.
Ruvuma Gas Asset
Scirocco Energy holds a 25% working interest in the Ruvuma Petroleum Sharing Agreement (PSA) in southeast Tanzania covering an area of 3,447 km2 of which approximately 90% lies onshore and the rest offshore where very substantial gas discoveries have been made offshore in recent years.
Gas has also been discovered onshore and along the coastal islands at Ntorya, Mnazi Bay, Kiliwani North, and Songo-Songo.
The Ruvuma PSA was granted in 2005. The original PSA comprised two licences, Lindi and Mtwara, and covered an area of over 6,079 square km, around 80% of which is onshore, in the Ruvuma Basin.
Following several statutory relinquishments, the Ruvuma PSA is now composed of only the Mtwara Licence which contains the Ntorya Appraisal Area over the Ntorya gas condensate discovery.
The Ntorya gas-condensate discovery, made in 2012 and operated by Aminex, represents the most immediate commercialization opportunity in the Ruvuma PSA.
The project is ideally located with access to a major onshore gas pipeline that connects the Ruvuma PSA to Tanzania’s main economic center, Dar es Salaam, allowing for the commercialization of gas from Ntorya.
A work program for Ruvuma is in place that will target a plateau rate of 140MMcf/d of gas from the Ntorya field.
Scirocco has been through a period of consolidation and rationalization of its historic portfolio to focus on its core natural gas and helium assets in East Africa. The company is focused on growing its portfolio in the European energy market.
Wentworth Resources is a leading domestic natural gas producer in Tanzania and is currently the only onshore domestic gas license with the Tanzanian government as a partner.
The company holds a 31.94% stake in the Mnazi Bay Gas Development adjacent to Ruvuma.
The asset is operated by Maurel & Prom which holds a 48.06% stake, with the Tanzania Petroleum Development Corporation (TPDC) holding 20%.
Ruvuma Transaction Highlights
· Total consideration of up to USD 16 million comprised of:
- Initial consideration of USD 3 million payable on completion of the Proposed Transaction;
- USD 3 million payable upon final investment decision being taken by the parties to the Ruvuma Asset Production Sharing Agreement or the JOA as the case may be;
- Deferred consideration of up to USD 8 million payable in the form of a 25% net revenue share from the point when Ruvuma commences delivery of gas to the gas buyer;
- Contingent consideration of USD 2 million payable on gross production reaching a level equal to or greater than 50Bcf.
Completion of the Proposed Transaction follows a formal sales process for the asset and is subject to Scirocco’s shareholder approval.
Commenting on the Proposed Transaction, Tom Reynolds, Scirocco’s CEO stated: “In Wentworth Resources, we have found the perfect counterparty that can add value to the Joint Venture going forward, and their existing profile in Tanzania ensures lower deal execution risk and the best chance of a swift completion.”
For its part, Wentworth Resources explains that Ruvuma is a c. 1.9 Tscf world-class asset that will significantly increase Wentworth’s resources and medium-term production, with the first gas expected in late 2024 and initial production of up to 140 MMscf/d (gross).
It will also reinforce the company’s commitment to Tanzania as its region of focus and its commitment to assisting the Government to reach its goal of providing universal energy access by 2030.
Commenting on the proposed acquisition, Katherine Roe, CEO of Wentworth Resources, said: “We think [the Ruvuma asset] is strategically perfect for Wentworth. We want to use all our experience, sub-surface and above ground, to develop the asset. We think it has a very good chance of being a high-quality producing gas field like we are seeing in Mnazi Bay and I think we can leverage all our 10 years + track record next door to enable the successful development of the Ruvuma license.”
Tanzania’s natural gas reserves are estimated at 57 trillion cubic feet with a total annual production of 110 billion cubic feet from three fields: Songo Songo, Mnazi Bay, and Kiliwani North.