Oil and gas exploration company Aminex has entered the construction phase of the Ntorya Project, Tanzania’s largest onshore gas development, marking a key milestone for the company and the country’s energy strategy.

The project is deemed of national importance for Tanzania and is expected to deliver long-term economic benefits for the East African country. It is also seen as a path of sustainable growth for Aminex.

Aminex now holds a 25% non-operated interest in the Ntorya gas development, which is governed by the Ruvuma Production Sharing Agreement (PSA), having completed a farm-out in 2020 to ARA Petroleum Tanzania (APT), an operator with a 75% stake. APT is the Tanzanian operating subsidiary of ARA Petroleum, a privately owned oil and gas exploration and production company based in Oman. It is responsible for developing the Ntorya gas field in southern Tanzania, including drilling, infrastructure construction, and eventual gas production and sales into the national gas network.

Following the company’s AGM on July 24, NewsBase spoke exclusively to Aminex’s board members – Executive Chairman Charles Santos and Senior Independent Director Tom Mackay.

Charles Santos brings over three decades of experience in political and commercial negotiations spanning regions such as West Africa, the Middle East, and Central, South, and East Asia. This includes involvement in major infrastructure projects - such as the Turkmen-Afghan-Pakistan-India gas pipeline - and advisory roles with the United Nations, particularly as a special advisor in peace missions in Afghanistan and Tajikistan.

Tom Mackay is a seasoned petroleum professional who has played a central role at Aminex over many years. He joined the company in 2014 and continues today as the senior independent non-executive director, with a background as a geologist, petroleum engineer, and technical advisor on global E&P projects.

Aminex in Tanzania

Santos calls Aminex “a total Tanzanian in previous incarnation”, adding that there is only one other listed energy company “with that kind of Tanzanian focus.” This positioning offers a unique opportunity for investors seeking exposure to Tanzania’s energy market.

Aminex first entered Tanzania in 2002, acquiring exploration interests that eventually included the Kiliwani North gas field on Songo Songo Island, which began producing in 2016. The gas was processed and transported via pipeline to the mainland, where it was used mainly for power generation in electricity plants, which supplied the national grid.

The Ntorya gas discovery was made in 2012 by the then-operator Ndovu Resources, a wholly owned Aminex subsidiary, in the onshore Ruvuma Basin. Development did not proceed immediately owing to a combination of factors, including the need for further appraisal drilling to confirm commercial volumes, delays in securing infrastructure and market arrangements, and the company’s limited financial capacity at the time.

By the end of that decade, the company was going through a challenging period. The management at the time had expected Kiliwani to produce for much longer, so they expanded operations and staff fairly quickly, Santos explained. But production there declined sooner than anticipated, and that expansion became unsustainable.

At the same time, the farm-out process with ARA Petroleum on the Ruvuma PSA, initiated in 2018, got stalled. Suddenly, the company faced financial pressures, and then the COVID-19 pandemic struck, adding further complications.

“I joined Aminex in 2020 when all of these issues were at full force, and Tom had just returned to the board after some time away. Our immediate priority was to restructure the company in a way that ensured its survival. It was a tough period; over the next year and a half to two years, we had to reduce costs drastically. That meant redundancies and cutting back general and administrative expenses to a bare minimum, just enough to see us through.”

Finally, the farm-out to ARA was approved in 2020 and work began in earnest to move the Ntorya discovery to the development phase and revive Aminex’s fortunes.

NB: What’s the current ownership structure in the project, and how has it evolved?

Santos: Initially, Aminex held 75% of the Ruvuma PSA, with Solo Oil (later rebranded as Scirocco Energy) owning 25%. In 2020, we farmed out 50% to ARA Petroleum, which took over as operator, reducing Aminex’s stake to 25%.

Then in 2022, Scirocco agreed to sell its 25% stake to Wentworth Resources. However, ARA exercised its pre-emption rights to purchase that stake at a very favourable price, increasing its holding to 75%. So, today, ARA owns 75%, Aminex 25%, and the Tanzanian government, through the Tanzania Petroleum Development Corporation (TPDC), has “back-in” rights for up to 15% once the project moves into development. This means both Aminex and ARA would be proportionally diluted. However, TPDC pays its share of development costs - this isn’t a free carry. That’s important because it shows the government’s financial commitment to the project.

Negotiations about TPDC’s formal entry and amendments to the joint operating agreement (JOA) are ongoing. We think their involvement will be a positive signal to investors, showing strong government commitment.

Moving forward

In March 2021, a new government under President Samia Suluhu Hassan came in with a fresh approach to foreign investment that opened up new opportunities for Aminex.

According to Santos, things started to pick up then and the company got a two-year extension on the exploration licence in 2021, which was crucial. Tanzania was facing a power crisis at the time. The country’s electricity generation was overly reliant on hydropower, but the rains were not coming as expected, and capacity was falling short. Despite their Mnazi Bay gas, there was not enough domestic gas supply for power generation.

That urgency from the government to diversify their energy sources and secure reliable gas supply made the Ruvuma project especially important. “Our goal was clear: drill the Chikumbi-1 appraisal well, log and test it thoroughly to assess the field’s value and move quickly into full development.”

Aminex had already drilled two fairly successful wells but lacked the capital and resources to push through 3D seismic acquisition and full development, Santos said. The Kiliwani project itself had struggled financially, so Aminex needed a partner with the capability and capital to develop Ruvuma properly. As ARA Petroleum was already familiar with the project and had made a major equity investment in Aminex in 2016 through its affiliate, Zubair Corporation, it made sense to bring them on board as a highly competent operator.

The partnership with APT has sufficiently de-risked the project, making it financially sound to pursue the Ntorya gas field development. A development licence (for a period of 25 years, with an optional extension for 10 years) was issued, further reducing risk and allowing the use of the existing wells (Ntorya 1 and Ntorya 2, or NT-1 and NT-2) alongside Chikumbi-1 (CH-1), which was planned for drilling. The 3D seismic helped pinpoint optimal drilling locations, improving geological confidence in the field, and opened up a whole new exploration horizon to the location.

Progress with pipeline

The project was further supported by the government’s commitment to build the pipeline from the Ntorya gas field to the Madimba gas processing plant spanning 30+ kilometres. According to Tom Mackay, all major gas infrastructure in Tanzania is owned by the TPDC.

The state-owned entity has recently confirmed that an EPC contract was signed with two subsidiaries of China National Petroleum Corporation - China Petroleum Pipeline Engineering Co (CPP) and China Petroleum Technology & Development Corporation (CPTDC). Funding was approved by parliament, and the TPDC now expects the pipeline to be completed and commissioned by around July 2026. Aminex expects first gas about a month later in August, with revenue for Aminex starting around a month after first gas.

So, the imminent start of the pipeline construction phase, announced by the TPDC, is seen by Aminex as a major milestone bringing the company closer to first gas from NT-2 and to revenue. Initial production from NT-1, NT-2 and CH-1 is planned at around 60mn cubic feet (mmcf) per day, all to be taken by TPDC for power generation.

NB: How does the pipeline capacity relate to your production goals?

Mackay: Aminex already has one well (NT-2) ready to connect. Our initial production plan involves three wells: NT-1, NT-2, and Chikumbi-1. The pipeline has capacity for 140 mmcf per day, more than the initial production. This will allow a phased ramp-up.

The tender process for the drilling of the appraisal well, Chikumbi-1, will start by mid-August and such process will determine the timing of the drilling of the well, planned for 2026.

Although initial throughput will be 60 mmcf per day, the pipeline capacity is 140 mmcf per day, with the first phase bringing production up to that level through three more wells. The second phase could double capacity to 280 mmcf per day from another 6 wells.

The 280 mmcf per day plateau is the designed peak, maintained over the life of the licence with measures like in-field compression installation to manage reservoir pressure as production continues, with up to four additional wells drilled during the third phase of field development.

NB: Could you share more about the geology of the field and resource estimates?

Mackay: Our early wells, NT-1 and NT-2, were drilled based on a relatively coarse 2D seismic. To refine the picture and plan for production above 60 mmcf per day, a high-quality 3D seismic survey covering over 300 km² was shot in 2022. The full scale of the field, the largest in East Africa, only became clear after acquiring 3D seismic data.

The seismic data was excellent and allowed us to map multiple reservoir horizons in detail. Based on that, both Aminex and ARA estimate a best-case resource of around 3.45 trillion cubic feet (97.7bn cubic metres) of gas in place.

With planned drilling and reservoir management, we expect to recover about 75% of that gas over a 35-year production period, which aligns with our licence duration including the 10-year extension.

NB: What about the role of offshore gas projects in Tanzania? Is there any competition?

Santos: Not really. Offshore projects in Tanzania are long-term and capital intensive, with production starting many years from now. Our Ruvuma field is onshore, much cheaper to develop, and can deliver gas, which Tanzania desperately needs, far sooner.

The government needs gas now, not in five or ten years, to support power generation and industrial growth. So, Ruvuma and offshore fields are complementary rather than competing. We fit an immediate niche. While demand beyond Tanzania’s domestic needs is still being assessed, the field is large enough to supply gas for power generation, industrial use, and potentially even exports.

NB: What are your relations with the Tanzanian government and local stakeholders?

Santos: Relations are positive. The government is committed to seeing this project succeed, which is evident in their pipeline funding and regulatory support. The involvement of TPDC and its back-in rights further underline this commitment.

In Tanzania, around two-thirds of the population still lacks access to electricity, leaving significant room for expansion in power generation. The government views gas from the Ruvuma project as a key driver for national development, enabling affordable energy that can accelerate social and economic progress. Initially, the scale of the Ruvuma resource was underestimated, but its proven potential has shifted government priorities. Officials are now pushing to bring this gas online as soon as possible.

NB: From a business perspective, what does this project mean for Aminex?

Santos: The company’s immediate focus is to achieve cash flow. Ruvuma has been prioritised, with Aminex and the government agreeing to delay work on the company’s two other Tanzanian assets until revenue starts coming in. Once that happens, Aminex plans to revisit the Kiliwani project, possibly running a small 3D seismic campaign, and to renegotiate the work programme for the Nyuni Area licence to make it more commercially viable.

Aminex has invested over $200 mn in Tanzania over the years, and this development will start generating revenue within about a year from now. We expect steady cash flow from the Ntorya development for 25 to 35 years. This provides the company with long-term stability and growth prospects.

NB: Finally, what is your outlook for the company and project moving forward?

Santos: Very optimistic. We are past the difficult restructuring phase and heading into construction and production. The pipeline will be commissioned by mid-2026, drilling continues, and revenues will begin shortly after.

With the largest onshore gas field in East Africa, backed by a stable government, growing domestic demand, and long-term licences, Aminex is well-positioned for a bright future in Tanzania.