Aminex PLC (LON:AEX) said it believes that Tanzania's gas sector is “unlocking” as it provided an operational update on work on the Ntorya gas discovery at Ruvuma alongside its final results for last year.
Ruvuma, where the London-listed company owns a 25% interest after the farm-out agreement to ARA Petroleum Tanzania (APT) last October, will see exploratory drilling begin in coming weeks at the Chikumbi-1 well, with 454 sq km of 3D seismic surveys beginning later in the current quarter.
Assuming a successful outcome from the drilling of the Chikumbi-1 well, Aminex said first gas from the project is anticipated to occur by the end of 2024.
APT considers the Ntorya gas reservoir to be the product of a stacked, high-energy, channelised sand system and internal management estimates suggest it contains mean risked gas in place of 3,024bn cubic feet (Bcf), Aminex added.
This is a result of APT having re-interpreted the existing 2D seismic dataset, and should be verified by the forthcoming seismic and drilling programme.
Charles Santos, executive chairman of Aminex, said: “APT, having taken over operatorship, has been actively progressing the Ntorya discovery towards a significant work programme in 2021/22. As part of this process, APT has independently mapped the Ntorya structure and share our excitement in the ultimate resource potential of the gas accumulation.
“The 3D seismic will be essential in optimally locating the Chikumbi-1 well to derive the most value in determining both reserve and development potential.”
Completion of the farm-out resulted in a US$5mln cash consideration for Aminex, with US$35mln of carry consideration for Ntorya’s development.
This meant the company finished 2020 debt-free and, having also reduced group administrative costs 40% during the year, resulted in a loss for the year of US$6.1mln compared to US$15.2mln the year before.
In his outlook statement Santos said that the company will be fully funded for its current activities, while relying on nearly US$2mln in payments due from ARA Petroleum to help with working capital requirements.
He said the company continues to explore the opportunity through remedial work to restart production from its Kiliwani North well and continues to see value in a low-cost remedial work programme once resolution is reached on outstanding payments for past gas sales with Tanzania Petroleum Development Corporation.
“Even with the COVID crisis, there remains a significant and rising energy supply deficit in Tanzania, mainly when considered against growing demand, highlighting the importance of assets at different life cycles of their development like Kiliwani North, Ntorya and Nyuni,” he said.
Santos added that Aminex is likely to be supplying gas domestically and so would be “less directly impacted by global commodity price weakness once in production”.
“We have seen positive signs that the Tanzanian government is working with producers in-country to support Tanzania's power demands which outstrip the current supply. We, therefore, remain highly optimistic about the future of this project and what it will mean to the people and Government of Tanzania.”