Scirocco Energy PLC (AIM:SCIR) gave investors an update on progress underway in Tanzania, as partners Aminex PLC (LSE:AEX) and ARA Petroleum (APT) advance the Ruvuma project towards production.
It comes as Scirocco continues to await the divestment of its 25% stake in the project to APT.
In a stock market statement, the company noted that the partners have now selected a new optimal location for the Chikumbi-1 (CH-1) well, following analysis of 3D seismic data, and they expect approval for the well from the Tanzanian authorities soon.
Scirocco’s deal with APT, agreed in June 2022, sees it receive US$3mln upon completion with total proceeds potentially rising up to US$16mln and with future payments linked to project milestones. An acceleration of the project will result in faster receipt of the deal proceeds to Scirocco.
Tom Reynolds, Scirocco chief executive, said in today’s statement: "The significant progress made by the JV in the development of the Ruvuma license has provided us with improved clarity regarding the timing of contingent payments under the sale arrangements between ARA Petroleum Tanzania and Scirocco.
“Scirocco Energy is continuing to make progress towards the completion of the transaction.”
Today’s update additionally noted multiple operations relating to Ruvuma, including the completion of 3D seismic data processing, with a full revision of gas reserve potential anticipated in the fourth quarter of 2023.
A well-workover of the Ntorya-1 well is meanwhile scheduled after the drilling of CH-1 and this well programme could allow for a rapid tie-in to gas production facilities and early production.
The Ruvuma partners and the Tanzania Petroleum Development Corporation have agreed the gas sales agreement for Ntorya and this is presently awaiting approval by the Tanzanian authorities.
Similarly, the approved field development plan for Ntorya has been approved and is awaiting final government authorisation.
Separately, Tanzania is advancing the construction of an export pipeline which will allow the connection of Ntorya to the Madimba gas plant. This link is expected to be functional by December 2023.
The project is being led by APT, a subsidiary of Oman’s Zubair Corporation, which as well as acquiring Scirocco’s stake also has a farm-in deal with Aminex that sees it carry up to US$35mln of Aminex’s costs to bring Ntorya into production.