Petroleum Africa
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Thursday, January 14, 2016
Aminex achieved a major milestone in its operations in Tanzania with the execution of a fully-termed Gas Sales Agreement (GSA) with state-run oil and gas company Tanzania Petroleum Development Corp. (TPDC) for its Kiliwani North gas field on the Kiliwani North Development License (KDNL).
The signing of the GSA with TPDC means the company and its partners on the KDNL; RAK Gas, Bounty Oil and Solo Oil can move forward with their much anticipated production phase.
The Kiliwani North GSA allows for the expected depletion of production from the field over time. 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 GSA. Gas from Kiliwani North will be supplied to the recently completed Songo Songo gas processing plant.
Aminex revealed 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.
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.
Gas from the development will be sold at $3.00 per mmbtu and the price will be adjusted annually by applying an agreed US Consumer Price Index. Gas revenues will be invoiced and payable in USD, whiled the gas delivery point will be at the outlet flange of the Kiliwani North wellhead. According to Aminex the sale of the gas at the wellhead, eliminates pipeline transportation and processing fees for the JV partners.
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