KEYFACT Energy
Wentworth, the AIM listed independent, East Africa-focused oil & gas company is pleased to announce the formal signing of the Commercial Operations Date agreement ("COD"), a key commercial milestone for Wentworth and the Mnazi Bay Joint Venture Partners.
Further to a signing ceremony held yesterday in Dar es Salaam, Tanzania Petroleum Development Corporation ("TPDC"), Etablissements Maurel et Prom S.A. ("M&P") and Wentworth, together, the Mnazi Bay Joint Venture Partners (" JV Partners"), approved the signing of the COD in relation to all terms of the Gas Sales Agreement ("GSA") signed by the JV Partners on 12 September 2014 and which are now in effect.
The agreement on declaration of COD also includes treatment of the outstanding invoices in accordance with GSA payment arrangements, such that any outstanding arrears are cleared by 30 June 2020.
The COD officially marks the end of the commissioning and testing phase of Mnazi Bay gas production into the National Natural Gas Infrastructure ("NNGI"), the transnational pipeline, which commenced in August 2015. It further demonstrates that all facilities in connection with this GSA have been fully tested and commissioned to ensure reliability and compliance with established commercial practices.
Reaching COD is a key operational and commercial milestone for Wentworth as it ensures the GSA is fully binding, including, but not limited to:
- Certainty of tenure and off-take gas price tariff through to 2031;
- Minimum daily committed quotient ("DCQ") of 80 MMscf/d, rising to 130 MMscf/d, for the entire remaining term of the GSA;
- Enforceability of a "take or pay" provision at 85% of the DCQ; and
- An improved framework for gas nominations procedures.
Wentworth has previously set out four key value catalysts for the joint venture, with a view to reaching a 130 MMscf/d production plateau and unlocking the material remaining prospective resources on the Mnazi Bay asset. Having successfully agreed an initial reduction of the NNGI inlet pressure to the Madimba gas receiving facility in April 2019, from 95bar to 85bar, achieving the COD secures a further key milestone for the Company.
Regarding field operational activities, the slickline and pressure monitoring campaigns continue and the Company is engaged in regular dialogue with M&P, the Operator, in relation to the optimal production strategies for the asset. Following the ongoing Production Sharing Agreement ("PSA") reviews, the Partners will look to secure a licence extension beyond 2031 to allow the joint venture to unlock the material prospective resources remaining in the concession.
Eskil Jersing, CEO, commented:
"This is a significant milestone for the Mnazi Bay asset that Maurel et Prom and Wentworth have been working towards for some time. Achieving the COD and securing the full GSA is further indication of the excellent collaboration between the Tanzanian Government and the Mnazi Bay partnership to secure gas supplies for a rapidly growing domestic market.
"We believe Wentworth is well placed to supply this market from an annuity-like asset which also has material remaining upside. This confidence in the Mnazi Bay gas fields and developing market has been shown by our recent introduction of a dividend policy.
"We would like to thank our partners, Maurel et Prom and TPDC, in particular; for their continued collaboration as we continue to supply domestic gas in a safe and reliable manner for the country of Tanzania."