TIDMVOG
RNS Number : 7761A
Victoria Oil & Gas PLC
29 December 2014
29 December 2014
Victoria Oil & Gas Plc
("VOG" or "the Company")
Major Gas Sales Agreement Signed With ENEO Cameroon
Highlights
-- Major gas sales agreement signed with ENEO
-- Gas to be supplied to Logbaba(30MW) and Bassa (20MW) power
stations under a two year contract at a fixed price of
US$9/mmbtu
-- Gas consumption to generate 50MW is 10.1mmscf/d of which
minimum take or pay component is 90% in dry season and 30% in wet
season
-- ENEO's schedule requires 50MW of power to be online by end Q1 2015
-- Total GDC gas production for 2015 expected to average 10.4 mmscf/d
Victoria Oil & Gas Plc, today announces that it's wholly
owned subsidiary Gaz du Cameroun S.A. ("GDC") has signed a legally
binding term sheet with ENEO Cameroon S.A ("ENEO"), Cameroon's
integrated utility Company, to supply gas to two power stations
located in the city of Douala ("The Agreement").GDC has also signed
a legally binding term sheet with ENEO and Altaaqa Alternative
Solutions Projects DWC-LLC ("Altaaqa") a United Arab Emirates
equipment supply company. Altaaqa will provide power generation
equipment and has responsibility for importing and installing the
Gensets at the Douala power stations. GDC will work with Altaaqa to
make the initial gas connections.
The term sheets have been signed to enable the project to be
expedited to meet ENEO requirements and it is expected that these
will be replaced by full contracts in early 2015.
The Agreement with ENEO is a major gas supply contract for VOG
in terms of scale and profitability with guaranteed minimum take or
pay gas consumption at a fixed US$9/mmbtu over the 2 year contract
term. The contract can be extended by mutual agreement. The take or
pay element gives GDC the necessary incentives to allocate
significant levels of gas to a single customer. The minimum take or
pay levels are 9mmscf/d in the January-June dry season and 3mmscf/d
in the July-December wet season. GDC anticipates actual demand from
ENEO will be higher than the minimum take or pay levels during both
seasons. ENEO requires all 50MW of power to be online by the end of
Q1 2015.
The Bassa Power Station is located 0.3km from our operating
northern pipeline and the Logbaba Power Station is located 1.3km
along the proposed eastern leg off our main line. The pipeline
construction to Bassa has been completed to the power station
boundaries and GDC has started pipeline construction towards the
Logbaba power station, this work is scheduled to be completed by
mid-January 2015. Please refer to the pipeline schematic, a link to
which is provided below:
http://www.rns-pdf.londonstockexchange.com/rns/7761A_-2014-12-28.pdf
By entering into the Agreement, GDC has become a part of the
Cameroon national energy strategy. ENEO have selected GDC to be a
key energy supplier as it has established a gas supply network that
is proven to be reliable and safe. GDC has been able to mobilise
quickly, working with equipment suppliers to meet ENEO's
requirement to rapidly bring on new power sources to Douala.
Based on a current production rates of 4.4 mmscf/d and assuming
a minimum take or pay gas supply level to ENEO, GDC would be
selling approximately 13.5 mmscf/d in the dry season and 7.4
mmscf/d in the wet season. These figures do not include any near
term thermal customers which the Company expects to be online
during the course of Q1 2015.
Kevin Foo, Chairman, of Victoria Oil & Gas said: "Today's
agreement with ENEO is truly a game changer for VOG. We have
secured a major, near term user of gas for our Cameroon business.
We are now becoming an active part of the Cameroon energy equation.
GDC and Altaaqa have been tasked by ENEO to meet an aggressive
schedule to supply gas to the two power stations and we expect to
deliver gas on time during the first quarter of 2015. Adding annual
average take or pay consumption of ENEO to our current production
indicates average minimum production levels for 2015 of
10.4mmscf/d."
Peter den Boogert, Managing Director of Altaaqa Global, said,
"Our gas power plant systems meet worldwide emission standards and
do not harm our environment. These plants are designed for
performance and reliability, while being more environmentally
friendly compared to systems running on other fuels. Additionally,
as the generators run on natural gas, they do not require expensive
after-treatments and are more economical to operate owing to more
cost-effective fuel prices. Gas systems are also more flexible in
fuel usage and remain efficient even with different fuel
varieties."
Usman Mahmood, Director of Finance and Accounting at Zahid Group
(of which Altaaqa Global is a subsidiary), added, "We recognize the
vital role that Cameroon plays in the regional economy of
Sub-Saharan Africa, and we understand how essential electricity is
in fulfilling such a part. We are proud to be involved in a project
that contributes to the improvement of the country's overall energy
infrastructure."
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo/Laurence Read Tel: +44 (0) 20 7921 8820
Numis Securities
John Prior/Ben Stoop Tel: +44 (0) 207 260 1000
Strand Hanson Limited
Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494
Tavistock Communications
Ed Portman / Simon Hudson Tel: +44 (0) 20 7920 3150 or +44 (0)
7966 477256
Notes to editors
About Victoria Oil & Gas
Victoria Oil & Gas (VOG.L) is an energy utility business and
hydrocarbon producer with energy supply operations in the
industrial port city of Douala in Cameroon. The Company generates
cash flow from its 60% owned onshore gas production wells and its
energy utility subsidiary, Gaz du Cameroun S.A. (GDC), supplies
cost effective, clean and reliable energy products to major
industries in the region. Customers are primarily supplied with gas
through an extensive pipeline network built by GDC in the Douala
area. GDC products currently include thermal gas, condensate and
gas for gas-fired electricity generation. GDC gas is attractive to
customers due to its reliability, price competitiveness, low
hydrocarbon emissions (compared to Heavy Fuel Oil) and adaptability
to meet varied power requirement needs.
VOG also holds 100% of the West Medvezhye oil and gas project
near Nadym, Russia. The field has C1 plus C2 reserves of 14.4mmboe
(under the Russian resource classification system, analogous to
proven and probable reserves under Western conventions) in addition
to best estimate prospective resources of 1.4bboe.
Cameroon Energy Market
Cameroon is a stable African country that is host to a
developing economy serving most of Central Africa with goods and
services. A power deficit remains a major hindrance to Cameroon's
economic expansion. The power grid is reliant on hydroelectric dams
to supply 75% of power and the shortfall is made up from heavy fuel
oil and gas. Hydroelectric dams are highly seasonal, with stream
rates significantly varying from 6,000m(3) per second in the wet
season to 50m(3) per second in the dry season. As with many hydro
electrical systems transmission loss is also a constant issue when
balancing power loads across distances to different consuming
regions. The port-city of Douala is the major industrial zone
within Cameroon and it requires high levels of consistently
delivered grid power all year round. Currently Cameroon's energy
demand is growing at 7% annually and gas is seen as a key element
to Cameroons national energy strategy.
To develop Cameroon's national energy infrastructure the state
has created a Joint Venture structure whereby international private
sector company's partner to provide the necessary funds and
expertise to expand power output. In 2014, Actis, the UK-based
energy infrastructure investor, paid $202 million for a 56% stake
in Cameroon's national integrated utility, Société Nationale
d'Electricité (SONEL) and in two independent power plants, Kribi
and Dibamba. SONEL provides 933MW of power to Cameroon of which the
majority is hydroelectric. ENEO was created from this partnership
with the Cameroon state to deliver the next stage of the country's
power infrastructure.
About Altaaqa Global
Altaaqa Global, a subsidiary of Zahid Group, has been selected
by Caterpillar Inc. to deliver multi-megawatt turnkey temporary
power solutions worldwide. The company owns, mobilizes, installs,
and operates efficient temporary independent power plants (IPP's)
at customer sites, focusing on the emerging markets of Sub-Sahara
Africa, Central Asia, the Indian Subcontinent, Latin America, South
East Asia, the Middle East, and North Africa. Offering power rental
equipment that will operate with different types of fuel such as
diesel, natural gas, or dual-fuel, Altaaqa Global is positioned to
rapidly deploy and provide temporary power plant solutions,
delivering electricity whenever and wherever it may be needed.
http://www.altaaqaglobal.com
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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