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Kiliwani North Development Licence Awarded

Source: 4/12/2011, Location: Africa

Aminex PLC announces that The Minister for Energy & Minerals of Tanzania, the Hon. William Ngeleja, has signed a Development Licence with the Company's Tanzanian subsidiary, Ndovu Resources Ltd., for the Kiliwani North Gas Field in Tanzania. This is a major step in bringing the Kiliwani North Field on to production.

The Development Licence represents an area carved out of the Nyuni East Songo-Songo Production Sharing Agreement (Nyuni PSA), which includes the mapped area of the Kiliwani North gas field. The Kiliwani North-1 well flowed gas at a rate of 40 million cubic feet per day (equivalent to 6,700 barrels of oil per day) under full production test conditions. Ndovu manages the Nyuni PSA and the Kiliwani North gas field as operating partner for a four-company consortium.

East Africa has become the subject of high industry interest recently, following successful drilling by large companies operating in deep water, both in Tanzania and in neighbouring northern Mozambique. The Kiliwani North Development Licence is the first new Development Licence granted in Tanzania as a consequence of exploration drilling carried out in recent times and is a significant milestone in the commercialisation of Tanzanian gas.

Kiliwani North has been independently estimated to contain 45 billion cubic feet (BCF) gas in place on a Pmean Contingent Resources basis, equivalent to 7.5 million barrels of oil. Gas from Kiliwani North will be available to assist in countering current energy shortages in Tanzania.

Another prospect which lies within the development area, known as Fanjove North, but which has yet to be drilled, has been independently estimated to contain in excess of 200 BCF gas in place, equivalent to approximately 30 million barrels of oil, on a Pmean Prospective Resources basis and, subject to the outcome of a planned transition zone seismic survey, may be drilled in due course.

The Kiliwani North wellhead is situated on the southern tip of Songo-Songo island off the coast of Tanzania and is less than 3 kilometres from the nearest access point to the process facilities (being upgraded) at the input end of the Songas common-user pipeline which delivers gas from the neighbouring Songo-Songo field to the city of Dar es Salaam. Ndovu has already negotiated a memorandum of understanding for the future sale of gas to industrial users in the Dar es Salaam area and expects to be able to deliver first gas within 12 months.

Partners in the Development Licence are: Ndovu (Aminex) (65%), RAK Gas Commission (25%), Key Petroleum (5%), and Bounty Oil (5%).

Aminex chairman Brian Hall commented: "We are very pleased to have been granted this Development licence, which represents a major landmark in our Tanzanian operations. The Development Licence will also benefit Tanzania, paving the way for a further energy source in a market with high and urgent demand."

Kiliwani North is well situated, close to a major pipeline, and the Development Licence will enable us to negotiate agreements to access processing and transportation facilities. The existing pipeline has limited capacity but we may expect development of new pipeline infrastructure as a consequence of recent deep water gas discoveries.

The new Development Licence is a significant step for Aminex in commercialising its Tanzanian operations. Within two months we expect to start new exploration drilling at nearby Nyuni Island targeting a large gas prospect within the Nyuni PSA. Negotiations are being satisfactorily concluded with the Tanzanian authorities for a new, enlarged Nyuni PSA, which will replace the existing Nyuni PSA upon its expiry this year. This will be the first-ever renewal of an expired PSA in Tanzania. In the event that the Nyuni-2 well has not been concluded by the expiry of the current PSA, the Tanzanian authorities have indicated that they will provide an extension to the existing PSA to enable the Nyuni-2 well to be completed.

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