Australian firm sells oil interests in Tanzania

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By KENNEDY SENELWA Special Correspondent

Posted Saturday, November 24 2012 at 10:57
IN SUMMARY

• The sale includes a five per cent stake in Kiliwani North Development License which has 45 billion cubic feet (BCF) of natural gas and Tanzania-based Funguo Petroleum Pty Ltd that is a subsidiary of Key.
• Key’s managing director Kane Marshall said the transaction completes the full divestment of remaining international interests allowing the company to concentrate on exploration activities in Australia.

Australia’s Key Petroleum has sold its exploration interests in Tanzania to Bounty Oil and Gas NL as it seeks to reduce its non-core assets.


The sale includes a five per cent stake in Kiliwani North Development License which has 45 billion cubic feet (BCF) of natural gas and Tanzania based Funguo Petroleum Pty Ltd that is a subsidiary of Key.


Before the deal, Key had five per cent stake in Kiliwani North which is 3.5 kilometres from Songo Songo Island, Bounty Oil had 5 per cent interest, Aminex Plc (65 per cent ) and RAK Gas Commission (25 per cent).


Key’s managing director Kane Marshall said the transaction completes the full divestment of remaining international interests allowing the company to concentrate on exploration activities in Australia.


“We can now focus all our attention on the upcoming Australian exploration activities in the Canning and Perth Basins, especially with imminent drilling campaign in Cyrene-1,” he said.


Rising demand

The terms of the sale agreement require the Australia Stock Exchange quoted Bounty Oil and Gas NL to pay $250,000 cash to Key, of which $205,480 has been allocated to the development costs of Kiliwani North.


The remaining balance of $44,470 will be paid directly to Key. The firm will also receive ordinary shares of Bounty valued at $156,000.


Demand for gas is increasing due to industrial use and planned new power plants in Tanzania. Kiliwani North’s commercialisation depends on negotiating agreements to link the field to the new Dar es Salaam gas pipeline.


Tanzania in July launched the building of a 532-kilometre pipeline to Dar es Salaam to be commissioned in 2014 to transport natural gas from Mnazi Bay in Mtwara region and Songo Songo in Kilwa District.


Tanzania Petroleum Development Corporation will manage the 36 inch pipeline that is being built using a $1.2 billion loan from Export-Import Bank of China.