Solo and Aminex begin Tanzanian gas talks

Oil companies Solo Oil and Aminex announced on Monday that negotiations were underway with the Tanzanian government to begin the sale of gas from the Ruvuma Basin project into a new pipeline.

A 36-inch pipeline is being constructed between Mtwara and Dar es Salaam to ease congestion in the exiting Tanzanian pipeline system, and will pass within 12 kilometres of the Ntorya-1 well.

Ntorya-1 was drilled in 2012, and has at least 178 billion cubic feet of gas in place according to an independent reserves assessment.

Aminex and Solo are also negotiating for the sale of gas from the Kiliwani North well, which Aminex said was ready for production, and for any subsequent discoveries in the Ruvuma Basin.

"[Aminex] is confident that fair and economically viable terms, together with a reliable delivery mechanism to market, will be established in the near future," a spokesperson for the company said.

The two companies also updated on plans for an appraisal of the Ntorya-1 gas discovery, an appraisal licence having been issued on 8 July.

They plan to acquire additional 2D seismic data later in 2013, and are in discussions with various companies over a potential farm-out. Aminex said that any new partner would "participate in both the Ntorya appraisal activity and the remaining exploration activity in the block".

Shares in Aminex, which owns 75% of the Ruvuma licence, soared over 8% on the announcement, while shares in Solo, which holds the remainder of the licence, rose by around 1.6%.

"Whilst progress towards the eventual commercialisation of the Ruvuma PSA has been slightly slower than we previously envisaged we remain enthusiastic about the eventual outcome," commented Solo executive director Neil Ritson.

"The Ruvuma Basin has been one of the most active exploration areas for gas in east Africa in recent years and the commercialisation of gas is now underway.

"A clearer pathway to monetisation is also attracting new potential partners and we hope to have positive progress to report over the coming months."

Investor view

"A great update as far as I'm concerned and a timely reminder what has been achieved," enthused user 'Seagull2' on the Interactive Investor Aminex discussion board.

"Sounds like Aminex have a choice of partner and significant works in the pipeline on the operational side."

However, 'Jimla' focused on what had not been revealed in the announcement, commenting: "The incoming partner will partake in the appraisal.

"It didn't say they would partake in the seismic of late 2013. How will the 2013 seismic be funded?"