4 Apr 2014 07:00
Victoria Oil & Gas PLC
4 April 2014
(AIM: VOG)
Victoria Oil & Gas Plc
("VOG" or "the Company")
Logbaba Project Update,Cameroon
Highlights
· Commencement of gas pipeline extension under the Wouri river to Bonaberi area
o Preparation work begun in anticipation of May 2014 drilling start
o 1.03mmscf/d of customer GSA agreements already signed for supply in Bonaberi area of which 0.83mmscf/d of these customers are located near pipeline exit point in Bonaberi
o All permits secured for the pipeline crossing under the Wouri Estuary to the Bonaberi
· First electricity generation set ("Genset") installations scheduled to be online in May 2014
· Plans to build a Compressed Natural Gas (CNG) business by early 2015
· Production levels steady at 3.2mmscf/d and estimated production of 4mmscf/d by June 2014
Gas Pipeline under Wouri River
Victoria Oil and Gas Plc, the emerging African energy utility company, today announces that its operating subsidiary, Gaz du Cameroun S.A ("GDC"), will commence the 1km gas pipeline crossing under the Wouri River to Bonaberi. GDC has completed initial project planning, including environmental and safety analyses and has received all the necessary permits, including the grant of Certificate of Environmental Conformity by the Minister in Charge of Environment, Nature protection and Sustainable Development.
Preparation work for the crossing including ground surveying has begun and drilling is scheduled to commence in May 2014, with completion planned 40 days later. GDC has undertaken a market analysis that has identified key consumers and has already signed 1.03mmscf/d of customers in anticipation of the pipeline roll-out, of which 0.83mmscf/d are near the northern pipeline exit. GDC believe that an immediate market of 2.41mmscf/d is available in Bonaberi based on the conversion of thermal boilers from HFO to natural gas. Industries in the area include palm oil producers, food manufactures, and mixed light industry. Bonaberi is the second largest industrial zone in Douala with a significant number of industries using Heavy Fuel Oil ("HFO") and reliant on the existing source of electrical power.
GDC has also reached an agreement with drilling contractors who will provide their services on a fixed cost basis for the Wouri crossing. This will limit Company exposure to any cost overruns.
Electricity Generators
Gas supply installation to Gensets is well advanced and permits have been received by our customers to allow them to auto-generate. Six Gensets are currently being installed by GDC with gas also being supplied to a seventh unit owned by a customer. The Gensets and connections are all being installed within existing customer's premises. Extensive surveying of customer sites and power transition planning must take place before engineering work starts. All pipeline work
has been completed for the first 3 Gensets and commissioning engineers will arrive soon in Douala. The first Gensets are scheduled to come online in early May 2014.
Compressed Natural Gas (CNG)
The Company has long recognised the potential for CNG as this product can be shipped in tankers to customers beyond the limits of our pipelines. CNG is used in many countries for industrial and transportation applications and is a natural step forward in terms of products from our gas deposits. The Company has entered into discussions with strategic and financial partners with a view to develop an operating CNG business in Douala in early 2015.
Production Levels Steady and Cash Break Even Maintained
Production levels of 3.2mmscf/d remain steady and the Company remained at operational break even through March. With scheduled thermal customer hook-ups and Genset customers coming online, average production levels should rise to about 4mmscf/d by June 2014. Dangote, a large cement manufacturing customer is expected online in Q3 and will consume more than 0.5mmscf/d. Discussions between GDC and AES-Sonel aimed at providing 45MW of gas fired temporary generating units to their power stations continue. Production costs will also be reduced substantially when the Company completes the purchase of the rented Gas Treatment Plant before June.
Kevin Foo, Chairman said; "Company operations are steady and satisfactory with production costs expected to decrease in the next months. Having completed all necessary permitting for the Wouri crossing we have commenced work to shoot the 1km of pipe, under the river, and then start supplying the Bonaberi area with gas. With firm contracts already in place for supply in Bonaberi we shall immediately begin connections upon entry to the North shore. Our Genset installation and supply work is going well with first generation expected in May 2014. We are excited about our venture into CNG which can give GDC greater catchment area for customers beyond our pipeline and outside of Douala."
For further information, please visit www.victoriaoilandgas.com or contact:
Victoria Oil & Gas Plc
Kevin Foo/Chane Brooks/Laurence Read Tel: +44 (0) 20 7921 8820
Fox-Davies Capital
Daniel Fox-Davies Tel: +44 (0) 20 3463 5010
Strand Hanson Limited
Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494
Tavistock Communications
Ed Portman / Conrad Harrington / Simon Hudson Tel: +44 (0) 20 7920 3150