By Stewart Dalby
The word” shortly” or its equivalents have been used so often about several aspects of Aminex’s flagship project, the Kiliwani North gas development in Tanzania, that they seem almost to have lost their currency.
Shareholders have been told many times in recent months that the pipeline linking the KN-1 well to the new Songo Songo processing plant would be completed “soon”. They have been re-assured that the important farm out to Solo Oil was about to close.
The key gas sales contract (GSA) has been on the cusp of being signed for the best part of a year as the partners await final approvals from the authorities. Last year the project was penciled in for production start –up in early 2015. But here we are, into March, and it seems the project has slipped to first half of 2015.
Now however, it does seem the JV partners are really, but really, very near closure on various parts of the scheme. Aminex has recently advised Solo that the pipeline from Songo Songo is now just about complete and the Tanzanian Petroleum Development Corporation is constructing the Skid Metering Unit within the boundaries of Solo’s lease before tying in to the KN-1 wellhead.
Solo has also now said it is pleased to confirm that formal approval has been received from the Tanzanian authorities for the company to acquire up to a 13 per cent interest in Kilwani from Aminex. There remain no further conditions precedent to the previously announced acquisition of a 6.5 per cent interest in the KNDL for US$3.5 million and the transaction has been completed. Solo also retains the right to purchase an additional 6.5 per cent in the KNDL on the same terms up to 30 days after the signing of the Gas Sales Agreement.
Once this deal is done the Kiliwani North equity split will be: Aminex with 52 per cent, RAK Gas with 25 per cent, Solo with 13 per cent and Bounty Oil with 10 per cent. This is an important deal for the financially hard pressed Aminex as it provides a US$7 million cash sum to pay down debt and help it remain in control of its destiny.
As for the GSA, Aminex has said it appreciates shareholders continued patience regarding finalisation of the long anticipated GSA. This remains largely complete but it is experiencing delays in closing due to the Tanzanian authorities’ approval process. It adds:”Your Board expects the GSA to be signed prior to any gas being delivered for pressure testing or commissioning.”
Once onstream the 45 BCF field will pump around 20 million cf/d, after being processed at Songo Songo into the main Dar es Salaam to Mnazi Bay export pipeline, putting Aminex on track for much needed production and revenues in the coming months to strengthen the balance sheet. Aminex’s CEO Jay Bhattacherjee said , “ We look forward to first commercial gas production from the field which will place the company in the position of being the first new Tanzanian gas producer in recent times.”
It’s also good news for Solo Oil, giving it a stake in a near-term production project in one of its core areas – it already partners Aminex on the Ruvuma PSA in Tanzania, home to the 2012 Ntorya discovery. For Solo, however, the deal is less binary as it’s portfolio is more diversified, with a stake in the Horse Hill project onshore UK, where US-based NUTECH Ltd has been brought in to help assess the scale of last year’s discovery.
Both Aminex and Solo like other small cap oil and companies have been afflicted by the malaise that have laid the sector low. But Aminex at 1.98p is well above its 52 week low of 0.65p. Solo though well down on its 12 month high of 1.09p is similarly well north of its low of 0.15p.