The Tanzania Petroleum Development Corporation (TPDC) intends to exercise its right to back into the Kiliwani North development licence,
The TPDC will take a 5% working interest as a fully-paying partner, which means it will be obliged to pay the existing joint venture partners 5% of the development capital spent to date, and a share of costs henceforth.
Participants in the KNDL are currently: Ndovu Resources Ltd (Aminex) 58.5% (operator), RAK Gas LLC 25%, Solo Oil 6.5% and Bounty Oil & Gas NL 10%.
Once the investment “back-in” is concluded Solo's (LON:SOLO) interest in the Kiliwani North development licence (KNDL) will be diluted to 6.175% from 6.5%, while Aminex's (LON:AEX) interest will be 55.575%.
The KNDL contains the Kiliwani North 1 well, which Solo expects to churn out up to 30mln feet per day of gas (gross). Once it is producing, it will represent a major milestone for both Aminex and Solo.
"Solo is delighted that TPDC have chosen to exercise their back-in rights, which will further increase their alignment with the partnership developing Kiliwani North,” said Neil Ritson, chairman of Solo Oil.
“We continue to anticipate reaching final agreement on the gas sales agreement shortly and gas sales revenues commencing soon after,” he added.
Jay Bhattacherjee, chief executive of Aminex, said: “By exercising this option, TPDC confirms the importance to Tanzania of gas from the Kiliwani North project and aligns its interests with those of the joint venture partners.”
A gas sales agreement is waiting to be signed off and once it is, it will allow gas to flow from the KNDL to the newly constructed Songo Songo Island gas processing facilities and into the national pipeline to customers in Dar es Salaam.
The operator continues to report the imminent conclusion of the gas sales agreement discussions, Solo told investors.
When it is concluded, Solo has the option to increase its interest in the KNDL by 6.5%.