FRENCH oil producer Maurel & Prom and its partners have inked a gas sales agreement with Tanzanian authorities, bringing the joint venture a step closer to producing first gas from the Mnazi Bay fields in 2015.
Under the agreement, the JV will supply natural gas from the Mnazi Bay and Msimbati fields in southern Tanzania to the government owned and operated Mtwara to Dar es Salaam pipeline and Madimba central processing facility, currently under construction and scheduled for completion and commissioning in the first quarter of 2015.
The long-term agreement signed between the Tanzania Petroleum Development Corporation (TPDC), Maurel & Prom and licence partners Wentworth Resources will see initial gas deliveries start between January and April next year at a fixed price of US$3 per million British Thermal Units of gas.
The gas sales agreement remains subject to certain conditions, including the Tanzanian government providing all necessary approvals and providing an executed version of payments security agreements.
With a long-term contract in place, the Mnazi Bay partners will use the time before the start of first gas delivery to construct and commission the necessary surface infrastructure, inclusive of separation facilities and flow lines, to tie existing wells into the pipeline project.
Gas will be produced from the existing four wells in the Mnazi Bay and Msimbati fields which are expected to be capable of producing natural gas sufficient to meet the initial 80 mmcf/day delivery volumes under the Mnazi Bay gas sales agreement.
Maurel & Prom is the operator of the Mnazi Bay licence with a 48.06 per cent production interest, while London Stock Exchange-listed Wentworth owns a 31.94% production stake. State-run TPDC hold the remaining interest in the licence.
Wentworth executive chairman Bob McBean the Mnazi Bay gas sales agreement was a significant advancement in the development of the gas industry and put in place the foundation for future domestic gas development in Tanzania.
“Additionally, this agreement is a major milestone in Wentworth’s gas monetisation strategy to commercialise our discovered gas resources, taking us a step closer to reclassifying our resources to reserves, and is a significant value driver for the company,” he said.
“Following the processing and interpretation of recently acquired high resolution 2D data over the Mnazi Bay and Msimbati gas fields we plan to commence a development drilling program with the aim of increasing production up to 130mmcf per day.”
For Maurel & Prom, which first entered Tanzania in 2004, bringing the Mnazi Bay field into production will enable the group to generate a second source of cash-flow alongside its operations in Gabon.
“This represents a significant step forward with developing the value of this asset, which will contribute to the group’s cash-flow on a long-term basin from next year,” Maurel & Prom said.
“With the signing of this contract, the group will be able to book the reserves from the Mnazi Bay field.”