Aminex inks gas sales deal for Kiliwani North

Aminex, an Africa-focused oil and gas exploration and production company, has executed a fully-termed gas sales agreement with the Tanzania Petroleum Development Corporation (TPDC) for its Kiliwani North gas field, off Tanzania. 

According to Aminex, this deal moves the company into production phase.

Participants in the Kiliwani North Development Licence are: Ndovu Resources Ltd (Aminex) 55.575% (operator), RAK Gas LLC 23.75%, Bounty Oil & Gas NL 9.5%, Solo Oil plc 6.175% and TPDC 5%.

The Kiliwani North gas sales agreement allows for the expected depletion of production from the field over time, Aminex said. According to the agreement, in each contract year TPDC will be required to purchase, take delivery of or pay for a pre-determined volume of gas. In the event that TPDC elects not to take delivery of the pre-determined volume, it will pay for the equivalent of 85% of the agreed commercial rate of gas to be supplied, adjusted each year in accordance with the terms of the agreement, Aminex explained.

Gas from Kiliwani North will be supplied to the recently completed Songo Songo gas processing plant. Aminex further explained that final well preparations, which are currently ongoing, are being completed prior to testing and commissioning of the new plant. During this phase production rates will be varied to optimize well life and establish commercial rates. 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, Aminex said.

Start of operations

The start of commercial operations will be mutually agreed between the TPDC and Aminex after testing and commissioning has been completed. 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. 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, said the company.

Gas will be sold at $3.00 per mmbtu (approximately $3.07 per mcf) and the price will be adjusted annually by applying an agreed United States Consumer Price Index. The gas price is not linked to any commodity price so is unaffected by current commodity market conditions. 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.

Aminex reminded the shareholders that Solo Oil plc retains an option to purchase a further 6.5% stake in the KNDL (before TPDC back-in) for a period of 30 days following signing of the gas sales agreement, according to the terms of an agreement previously advised to shareholders. As previously reported, 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 Chief Executive, Jay Bhattacherjee, commented: “Aminex has operated in Tanzania for over 13 years, always working closely with the Tanzanian authorities, and the Kiliwani North Gas Sales Agreement represents a major milestone as the Company’s first commercial production in Tanzania. 

“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. 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.”