Member Info for Ufufuo

We had a frustrating few years of delays under the previous president. No licences were granted to any O&G companies. Nobody did any exploration.

Since then, we’ve completed the largest onshore 3D seismic programme in East Africa. That is meaningful progress.

That has been processed and the results are excellent. High confidence of 3.5tcf. Success for CH1 may take that to 8tcf. Potential for more than 16tcf. Plus a lot of valuable condensate. That is meaningful progress.

Gas Sales Agreement signed. That is meaningful progress.

25 Year Development License granted. That is meaningful progress.

Pipeline route confirmed. Land acquired. Detailed Engineering Design done. That is meaningful progress. Just waiting for news on construction contractuals. Deputy Prime Minister confirmed this week that he expects the pipeline to be built within 6 months.

Now preparing NT1 and NT2 for production.

CH1 schedule to be confirmed once contracts signed. Taking time due to rig share but expected soon and long lead items already onsite.

So, past delays were frustrating. However, things have been happening. Things are currently happening, and we can expect production and probably drilling within the next 6 months.

The rate of progress has been ramping up since the new President came to power. There will always be schedule risk but the tough negotiations are done. It seems more likely than ever that the current timescales for production will be broadly adhered to.

A nice article in the Tanzanian press today, highlighting that Tanzania has entered into agreements to sell natural gas to neighbouring countries.

Those countries include: Uganda, Kenya, the DRC, and Zambia.

The same article also reiterates plans to do this via pipelines and via Mini LNG. The companies being lined up for Mini LNG facilities and distribution all get a mention (including KS Energy. I noticed their CEO was at our licence ceremony this week), as does Ruvuma.

The article reminds us that, as a regional Energy Hub, Tanzania will export natural gas but also electricity produced from natural gas.

Also interesting that TPDC are investing the time to educate the media on what’s going on. That will help to generate more publicity for us I imagine.

https://www.thecitizen.co.tz/tanzania/business/tanzania-to-expand-natural-gas-exports-to-neighboring-countries-4761162#

Https://www.thecitizen.co.tz/tanzania/news/national/tanzania-ramps-up-natural-gas-production--4734086#:~:text=The%20Tanzania%20Petroleum%20Development%20Corporation,from%20petrol%20to%20natural%20gas.

We get another mention in the Tanzanian national press today…

“The Tanzania Petroleum Development Corporation (TPDC) is ramping up natural gas production by 80 million cubic feet (cf) in the next year to meet surging demand. The corporation anticipates a significant increase in demand for Compressed Natural Gas (CNG) as more vehicles are converted from petrol to natural gas.

The rise will also be fuelled by the planned increase in the number of factories that use natural gas to power their industrial production activities and an anticipated increase in demand for the resource in neighbouring countries.

As such, the TPDC said yesterday that it will start production at its second quarter project in the Ruvuma Ntorya block, which will produce 60 million cf, and expand production at its Mnazi Bay site by 20 million cf more in the next year.

Read:MPs, consumers up in arms over proposed CNG charge

"The aim is to create capacity ahead of demand to ensure that the nation becomes independent in the energy sector due to the continued increase in demand for vehicles, homes, and industries, as well as being a source of support for countries in East Africa and Southern Africa," said TPDC's board chairman Ombeni Sefue”

Hi CP, I agree that delays and disappointment surrounding the schedule will continue to be a risk here.

In recent years, the talk was about whether we’d get the farmout over the line, would we get bought out on the cheap, would we have the money to get to first revenues, would we get the development licence, etc.

I’m satisfied that it seems highly likely that Aminex will see first revenues and will drill CH1. Those things will hopefully be some time around Q2 but I won’t be surprised if things slip a bit here and there. I’m happy to sit tight and wait.

So, I guess I agree with you but I’m not fazed. It’s happening, that’s the main thing to me.

The trend in recent years for news from Aminex is that the schedule related news tends to disappoint but the content of the story unfolding is very, very good. Finances set up to avoid dilution and get us to first revenues, Ggood relationship with supportive local authorities, strong demand profile, very impressive seismic results, lots of very valuable condensate that we are free to sell, building our own gas processing plant, mini LNG, etc. Plus other positives including the hiring of the new professional PR firm and improved communications (at last!).

Huge rewards to be had here. Timelines always indicative.

Https://www.mwananchi.co.tz/mw/habari/kitaifa/mauzo-ya-gesi-asilia-yaongezeka-tpdc-ikitaja-mikakati-zaidi-4733280

Speaking yesterday (Wednesday August 21) after visiting and inspecting the main natural gas filling station located at the University of Dar es Salaam, the Chairman of the Board of Directors TPDC, Ambassador Ombeni Sefue has said…

“Regarding increasing gas exploration, the ambassador said that they are currently implementing exploration projects and production and development of natural gas and oil. "Ruvuma nursery in Ntorya area, TPDC collaborates with ARA Company Petroleum of Oman to develop natural gas discovered, the goal is to start production of natural gas in the second quarter of 2025"”

Chairman of The Board of TPDC seems to think production is still broadly on track.

That’s his view from yesterday. It would be good to see more concrete evidence but this is encouraging.

And all of that ties in to this post I did the other week:

AGM, The Board said that two gas fired power plants are under construction. So, I did a brief search to see what I could find. This TANESCO document from August last year details major power investment projects (so it’s less than a year old): https://www.tanesco.co.tz/attachments/investors_portal/doc_priority_project/PRIORITY%20PROJECTS%20TANESCO.pdf

The first section is ‘Short Term Generation Projects To be Implemented By June 2025. Hey presto! That section has just two projects - two gas fired power plants!

✅ The first is the 70MW Umbungo II gas fired plant

✅ The second is the 300MW Kinyerezi III gas fired plant

Following that, the document details plans for an additional gas fired power plant to be completed each year until 2030. Those are:

✅ 320MW Somanga Fungu gas fired power plant. Target to be online: Aug 2026

✅ 318MW Somanga Fungu (Mtama) gas fired power project. Target to be online: Oct 2027

✅300MW Mtwara combined cycle gas turbine power project. Target to be online: Sept 2028

✅330MW Kinyerezi IV combined cycle gas fired power project: Target to be online: Mar 2029

✅300MW Mtwara II combined cycle gas fired power project. Target to be online: ‘by 2030’

So, that’s 7 additional gas fired power plants planned to be producing power by 2030, with a new power plant every year! Together, they add up to 1,938MW of new gas fired power generation!

All part of Tanzania being a regional energy hub. If the offshore LNG project ever goes ahead, it will not be ready in time to meet any of this new demand. Ruvuma is in pole position.

In addition…

It would be interesting to hear the latest on this one…

A 45MW gas fired power station in Mtwara (in our back yard), that they want to increase to 300MW and get back into operation to export power to Mozambique.

Plans to expand the power plant to 300MW:

https://eastafricatimes.co.ke/mtwara-gas-to-power-to-power-industrial-take-off-in-tanzania/

Plans to export the power to Mozambique:

https://www.africa-energy.com/news-centre/article/aqua-power-seeks-export-electricity-tanzania-mozambique

Other reports say Tanesco might also be willing to buy some of this power.

With all of these opportunities, no wonder ARA and TPDC plan to build a dedicated gas processing plant at Ntorya. Demand is clearly much bigger than the spare capacity at Madimba.

100% Roger. An extraordinary case of the right asset, in the right place, being developed at an opportune time!

Building on the Tanzania ‘Energy Hub’ theme, in addition to the Tanzania-Zambia connector, it looks like this interconnector is either now commissioned or very nearly in service.

"Ketraco completed the construction at the end of December 2023. Solving snags and commissioning tests will be completed by the end of April 2024"

It will allow exports of up to 2000MW by the look of it. That’s a huge amount of power!

“Tanzania first disclosed plans to export power to Kenya in 2016 and had targeted to make the first shipments to Nairobi by 2018”

“The line has been marred by delays mainly on the Kenyan side, prompting AfDB to raise concerns”

“The Kenya-Tanzania line is integral in linking East African and the Southern African electricity pools, enabling sharing of power between the two regions in a bid to boost supply”

https://www.thecitizen.co.tz/tanzania/news/east-africa-news/kenya-misses-target-to-commission-power-line-to-tanzania-4568194

…and here’s the link!

https://dailynews.co.tz/taza-power-project-to-connect-tz-with-13-nations/

Tanzania plans to export energy via numerous transmission lines to other countries but this one is very significant.

“THE TANZANIA-Zambia (TAZA) power project once completed will enable Tanzania to connect with 13 member countries of the Southern Power Pool (SAPP) via Zambia and the Eastern African Power Pool (EAPP) via Kenya, the government said yesterday”

“Dr Biteko further stated that through the TAZA power project, Tanzania will become an electricity hub for member countries of the SAPP via Zambia and the Eastern African Power Pool”.

“Tanzania should sell electricity to SAPP and EAPP member countries when there is a surplus in power supply or buy electricity if the demand is greater than what is produced in the country,” added Dr Biteko.

“Tanzania is the link between SAPP and EAPP member countries via Zambia and Kenya respectively, which is why this project has unique importance as our country is at a great advantage to be a link for electricity trade in the East African region,” he said.

“This move will give us the opportunity to generate more electricity than our actual demand because there is a reliable market for this energy,” he added.

Hi SQ320 and StockCheque,

I see no real threat of a need to raise capital for the gas processing plant. Worst case, Aminex would need to cover $25m, or $21.25m if TPDC back in at 15%.

Aminex presentations have indicated that CH1 drill and test could cost ~$15m. Putting in place the rest of Early Production System (NT1, NT2 and CH1 I production), a further £3m. So, $18m in total. Aminex’s 25% share being $4.5m

According to the Annual Report of 29th April 2024 “Ruvuma PSA Farm-Out Carry of US$35 million covered Aminex for all 2023 Ruvuma costs with US$29.6 million of the Carry remaining as at 31 December 2023.”

Whilst there will presumably have been some additional spend in the last 6.5 months, I expect the majority of that $29.6m balance on the free carry is still there. Subtract the $4.5m of net costs for us to drill CH1 and get that plus NT1 & NT2 into production and you still have $25.1m remaining.

If construction is to start early 2025, I would expect that construction would take at least a year and that payments to contractors completing the works would be phased across the build. During that time we should have revenues coming in.

It may be that TPDC will pay for the gas processing plant themselves and that the collaboration with ARA is just in relation to planning and logistics of linking that with ARA’s development of the field.

Anyway, whatever the scenario, it looks extremely likely that we are covered by remaining free carry and anticipated revenues. That is even considering Aminex's share of drills following CH1.

Https://x.com/tpdctz/status/1811150172706979930?s=52&t=Imk87XVoZ33GBGiQAaJ5ig

Tweet from TPDC just now:

“The Secretary General of the Ministry of Energy Engineer Felchesmi Mramba has said that the Government has planned to cooperate with the private sector in increasing the speed of construction of natural gas distribution infrastructure in homes, factories and vehicles”

Hi HighYield, my understanding is that the terms of the PSA for Ruvuma are different to those for Kiliwani and are more favourable. The example given was that any liquids/condensate are ours to sell at prevailing market rate. It sounded like that was different to, and better than, Kiliwani terms. They didn’t give wider details on terms.

I can only assume that you are talking about the old and now defunct group. The new one is ‘Aminex Investor Group’

Something I posted on Telegram the other day but forgot to put on here…

At the AGM, The Board said that two gas fired power plants are under construction. So, I did a brief search to see what I could find. This TANESCO document from August last year details major power investment projects (so it’s less than a year old): https://www.tanesco.co.tz/attachments/investors_portal/doc_priority_project/PRIORITY%20PROJECTS%20TANESCO.pdf

The first section is ‘Short Term Generation Projects To be Implemented By June 2025. Hey presto! That section has just two projects - two gas fired power plants!

✅ The first is the 70MW Umbungo II gas fired plant

✅ The second is the 300MW Kinyerezi III gas fired plant

Following that, the document details plans for an additional gas fired power plant to be completed each year until 2030. Those are:

✅ 320MW Somanga Fungu gas fired power plant. Target to be online: Aug 2026

✅ 318MW Somanga Fungu (Mtama) gas fired power project. Target to be online: Oct 2027

✅300MW Mtwara combined cycle gas turbine power project. Target to be online: Sept 2028

✅330MW Kinyerezi IV combined cycle gas fired power project: Target to be online: Mar 2029

✅300MW Mtwara II combined cycle gas fired power project. Target to be online: ‘by 2030’

So, that’s 7 additional gas fired power plants planned to be producing power by 2030, with a new power plant every year! Together, they add up to 1,938MW of new gas fired power generation!

All part of Tanzania being a regional energy hub. If the offshore LNG project ever goes ahead, it will not be ready in time to meet any of this new demand. Ruvuma is in pole position.

Something I posted on Telegram the other day but forgot to put on here…

At the AGM, The Board said that two gas fired power plants are under construction. So, I did a brief search to see what I could find. This TANESCO document from August last year details major power investment projects (so it’s less than a year old): https://www.tanesco.co.tz/attachments/investors_portal/doc_priority_project/PRIORITY%20PROJECTS%20TANESCO.pdf

The first section is ‘Short Term Generation Projects To be Implemented By June 2025. Hey presto! That section has just two projects - two gas fired power plants!

✅ The first is the 70MW Umbungo II gas fired plant

✅ The second is the 300MW Kinyerezi III gas fired plant

Following that, the document details plans for an additional gas fired power plant to be completed each year until 2030. Those are:

✅ 320MW Somanga Fungu gas fired power plant. Target to be online: Aug 2026

✅ 318MW Somanga Fungu (Mtama) gas fired power project. Target to be online: Oct 2027

✅300MW Mtwara combined cycle gas turbine power project. Target to be online: Sept 2028

✅330MW Kinyerezi IV combined cycle gas fired power project: Target to be online: Mar 2029

✅300MW Mtwara II combined cycle gas fired power project. Target to be online: ‘by 2030’

So, that’s 7 additional gas fired power plants planned to be producing power by 2030, with a new power plant every year! Together, they add up to 1,938MW of new gas fired power generation!

All part of Tanzania being a regional energy hub. If the offshore LNG project every goes ahead, it will not be ready in time to meet any of this new demand. Ruvuma is in pole position.

It looks as though ARA and TPDC will be collaborating on building a dedicated gas processing plant for Ntorya.

Clearly, the capacity at Madimba is good enough for starters but the Ntorya asset is so big - and production potential so great - that we’re going to need our own gas processing plant.

https://www.facebook.com/share/k5bAu1FSvo8m3znY/?mibextid=WC7FNe

“The Tanzania Petroleum Development Corporation (TPDC) in collaboration with the investor ARA Petroleum Tanzania Company, expect to build a natural gas plant in Namahyakata Village, Naguruwe Ward, Mtwara District Council, Mtwara Region”

“Speaking on July 6, 2024 after the visit of the District Head of Mtwara Mwanahamisi Munkunda to visit two islands located in Mtorya Nanguruwe area, Geological Officer TPDC senior Patrick Kabwe, said the construction of the plant will cost approximately 100 million US Dollars, and is expected to start early in 2025”

“He said that currently the ongoing procedures are to meet with the citizens who will be deprived of their areas with the size of 57.6 square kilometers, and explain to them how they will be valued before paying them compensation.”

I’m assuming this is separate to the Africa 50 Mini LNG Project as there is no mention of them and there is also no mention of LNG.

Shows how big Ntorya is that it is worth doing this. It is also a strong indicator of where they see this going in terms of production volumes (and therefore revenues)

Yes, agreed StockCheque 👍

Hi RJ and CP - good to hear that you think the logic stacks up to indicate the potential plan.

So, yes, that would suggest CH1 being potentially drilled in 4 to 5 months time (Dec/Jan). Production starting from NT1 as a minimum in 9 months (Apr). Possibly all 3 wells in production at that time. Possibly NT2 and NT1. Worst case, it looks like NT2, followed by the other two in quick succession and by Q3.

A fairly pleasing roadmap whatever way you look at it I think. The run up to that should be interesting as we start to see kit arriving, pad being constructed and pipeline trench being dug on the satellite images.

Also, there has been a lot of discussion in the past about how CH1 now is a different proposition to what it would have been if it had been drilled straight after NT2. A key difference now is that it is now extremely likely that when CH1 is drilled, it will be possible to hook it up to the pipeline and to produce pretty much straight away. That has significant positive implications for how the share price is likely to respond - increasing the likelihood of, and extent to which, the rise on drilling will be maintained. On good results, speculative traders hand the baton to investors that are interested in the income and future prospects.

Another way in which the story has developed and contributes to CH1 looking more and more like a Goldilocks drill.