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Africa

Wentworth plans gas expansion in East Africa

Posted by on 13 April 2016
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The commitment of Wentworth Resources to developing gas finds for the East African market may have looked short-sighted in a world where oil cost $100 per barrel and its competitors were hunting for the big oil discoveries to flip.

However, now the oil price has crashed and Tanzania’s Mnazi Bay field is onstream, Wentworth’s patient bargaining with the government for its $3/MMBtu gas sales agreement is paying off.

Wentworth is "one of the [only] exploration and production companies of our size making money at the moment", Bob McBean, the company’s executive chairman, said on the sidelines of the East Africa Oil & Gas conference in Tanzania last week.

It is still early days. Deliveries to the Ubungo II and Symbion power plants from the Mnazi Bay gas stations along the new government-owned Mtwara-Dar es Salaam pipeline only started on 20 August last year.

Average production from the fields was 1.3 million cubic metres per day (MMcm/d) in Q4 2015, but should soon rise to 2.3 MMcm/d as turbines at existing and new generation facilities are commissioned and become fully operational.

"[State oil company] Tanzania Petroleum Development Corp. [TPDC] has been a good customer and payments have been kept up to date," said Richard Tainton, Wentworth’s international senior vice president.

Wentworth anticipates the demand for Mnazi Bay gas will soon rise. Tanzania’s government has committed to quadrupling the country’s gas-fired power capacity by 2020 from its current level of around 550 MW to meet rising demand and pick up the shortfall in hydroelectric generation, which has been crippled by sustained drought.

Wentworth, along with Mnazi Bay operator Maurel & Prom, is planning an active exploration programme this year at the concession and at its onshore licence in the Rovuma Basin in Mozambique.

"We ran some seismic surveys last year [...] We could drill some more exploration wells in 2017 or 2018, depending on how demand increases," said Tainton.

"The current gas sales agreement for Mnazi Bay is 3.7 MMcm/d, but TPDC has requested double that once the demand materialises in three to four years," he added.

Tanzania’s first priority is power, but Wentworth is considering other gas monetisation options, including a fertiliser plant. Tanzania and other countries in the region are large importers of urea fertiliser, and a plant could be built to use relatively small gas reserves.

In-house expertise

"We have the experience in-house to develop petrochemicals projects. Our chairman, Bob McBean, was managing director of QAFAC (Qatar Fuel Additives Company) and Neil Kelley, non-executive director, was managing director of the Ras Laffan LNG company. So that would be something we’d consider, although it’s a long way down the line," Tainton said.

Wentworth’s other focus this year will be on securing a new exploration and production concession contract (EPCC) for its Rovuma onshore block in northeastern Mozambique, where it plans to continue appraising the Tembo 1 gas discovery.

The company has held rights to the block since 2006, but Anadarko and its other partners in the concession decided to relinquish their holdings in August last year. This is the first time INP, Mozambique’s state petroleum regulator, has had to deal with a relinquishment in which some of the partners want to remain.

Under the new agreement, Wentworth will operate the block with an 85% stake, with Mozambique’s state oil company ENH holding the rest.

"We expect to hear from INP shortly and remain positive that we shall acquire the necessary consents to proceed with our appraisal plan," said Tainton.

However, INP is still finalising Mozambique’s new model EPCC following the publication of the new petroleum law in August 2014 and new petroleum regulations in December 2015.

"We are working on [updating the model EPCC] and we expect to finalise as soon as possible. We are trying hard to have it ready by the end of the month," INP’s Chairman Carlos Zacarias told Interfax Natural Gas Daily on Monday. However, waiting for the government to approve the new model could slow the process down.

Depending on the size of the gas find, the default option would be to supply gas for power to Anadarko’s planned 12 mtpa LNG plant in Afungi.

"We have a good relationship with Anadarko and an understanding they would take the gas, although no formal agreement has been signed," said Tainton.

However, a large gas find could justify the development of larger downstream gas project, such as a fertiliser plant.

Please contact Matt.Shelton@interfax.co.uk for a free trial to Natural Gas Daily or Global Gas Analytics

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