UK based Solo Oil announced that it has signed the fully termed Kiliwani North Gas Sales Agreement (GSA) with Tanzania which took effect on December 31, 2015.

Solo Oil said that Aminex plc, its operator partner of the Kiliwani North Development Licence (KNDL) has now executed the KNDL GSA for the Kiliwani North-1 well (KN-1) with the Tanzania Petroleum Development Corporation (TPDC) on behalf of the KNDL joint venture partnership. 

The GSA according to a statement by Solo Oil is a depletion contract allowing for the expected production of reserves from the KN-1 well over time. 

According to the GSA, In each contract year TPDC is required to purchase a quantity of gas and pay whether delivery is taken or not.  The annual quantity represents 85% of the minimum daily quantity of gas to be supplied, initially set at 20 million standard cubic feet per day (“mmscfd”), and adjusted each year in accordance with the terms of the GSA. 

Gas from the KN-1 well will be supplied to the newly built Songo Songo gas processing plant where it will be commingled with gas from the adjacent Songo Songo gas field before being transported, by pipeline, to the market in Dar es Salaam. 

Solo says Final well preparations are currently ongoing and testing and commissioning of the new Songo Songo plant and pipeline is expected to commence shortly, with KN-1 production being tested at various rates to establish optimum conditions.  During this period TPDC will be invoiced for gas produced at the end of each month and is required to pay immediately. 

The start of commercial operations will be mutually agreed by TPDC and the operator following the testing and commissioning phase. 

In his Official statement on the GSA, Solo Chairman Neil Ritson said the agreements provides the company with an opportunity to reignite business and start ripping benefits from the Project as early as 2016.

“We are delighted to start 2016 with the milestone signing of the Kiliwani North Gas Sales Agreement.  Gas production can now start, leading to the first revenues from our investments in Tanzania.  We also look forward to further successes in Tanzania during 2016 with the planned appraisal drilling on the Ntorya discovery in the Ruvuma PSC,” Ritson stated