Ruvuma JV receives 25-year development licence for Ntorya gas discovery in Tanzania

By Elena Kachkova in Johannesburg May 27, 2024

Tanzania's Ministry of Energy has granted a 25-year development licence over the Ntorya gas discovery area to the Ruvuma joint venture (JV).

The licence was received on May 23 by the operator of the Ruvuma JV, ARA Petroleum Tanzania (APT), a wholly owned subsidiary of ARA Petroleum in Oman, a full circle exploration and production (E&P) company.

APT holds a 75% working interest in the project. The company has been actively involved in the Ruvuma asset since 2020, having acquired a 50% working interest through a farm-in agreement with the original operator AMINEX and assuming the role of the operator for the asset.

In October 2023, APT acquired an additional 25% interest in the Ruvuma JV project from a UK-based oil and gas explorer Scirocco Energy. AMINEX, an oil and gas exploration and development company focused on Tanzania, holds a 25% non-operated interest in the Ruvuma JV.

The development licence allows APT to proceed with Tanzania’s largest onshore gas development with the goal of producing gas for the growing domestic market in the next year, ARA said in a statement on May 24.

“We are delighted to receive this licence from the Ministry of Energy and thank all the Tanzanian agencies involved in achieving this major milestone,” APT’s general manager Erhan Saygi said. “We are ready to launch work immediately to bring this onshore development project into production.”

APT says it has prepared a field development plan that includes, but is not limited to, converting an existing well into a producing well, building in-field gas processing facilities and contracting a rig operator to drill a third well to appraise the field further.

The company expects to produce 40mn cubic feet (mmcf) per day, or 1.13mm cubic metres (mcm) per day in the first year of production and to increase that to 140mmcf (3.96mcm) per day within a few years’ time, according to a Gas Sales Agreement with the Tanzanian Petroleum Development Corporation (TPDC) signed earlier this year.

According to APT, the potential for gas production from the field is far larger, as indicated by an interpretation of 3D seismic data over 338 km2 in the Ruvuma JV licence area.

APT considers the area to yield a matured unaudited contingent resource estimate of 3.45 trillion cubic feet (tcf), or 97.7bn cubic metres (bcm), of gas initially in place (GIIP), with a mean unrisked GIIP potential of 16.4 tcf (464bcm) and a risked mean potential of 6.9 tcf (195bcm) for the wider Ruvuma JV area.

Acknowledging this wider potential, the development licence divides the original “Mtwara Exploration Licence” area into nine blocks: five blocks containing the Ntorya discovery and four blocks labelled as “adjoining blocks”, the statement said.

The Ruvuma JV parties are required to undertake geological, geophysical and geochemical studies in the area and drill at least one additional exploration well within 5 years while spending a minimum of $10mn.

“We are excited about further exploration and appraisal work in this area as we consider it to hold truly enormous volumes of gas,” Saygi said. “We believe the Ntorya gas field and wider area could be game-changing for Tanzania’s efforts to alleviate energy poverty, spur further economic development and potentially transform the country into a regional energy hub,” he added.

AMINEX, with a 25% non-operated interest, is carried throughout the ongoing work programme to a maximum gross capital expenditure of $140mn ($35mn net to AMINEX). According to the company, the carry is expected to see it through to the commencement of commercial gas production from the Ntorya field at zero cost to AMINEX. 

Charles Santos, executive chairman of AMINEX thanked APT and all Tanzanian agencies for working together to achieve this major milestone.

“The Tanzanian government has clearly said it would use the country’s energy resources to eliminate energy poverty, spur growth and improve living standards,” Santos said. “We believe Ntorya is a vital part of this vision and the development licence helps turn this vision into reality. As a founding partner in Ntorya, we are proud and excited to support ARA Petroleum and the Tanzanian authorities in this crucial effort.”

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