ENEO deal begins to pay off for Victoria

22 January 2019, Week 03, Issue 771

The signing of a contract with Cameroon’s local power utility ENEO has already begun paying off for Victoria Oil & Gas, with production increasing in January to 8.5 mmcf (241,000 cubic metres) per day, up 91% over the fourth quarter average. 

In a statement on January 21, the company said production from its Logbaba field had averaged 9.9 mmcf (280,000 cubic metres) per day in the seven days to January 19. 

As a result, ENEO has doubled power production to 30 MW since the contract resumed in late December. The utility’s consumption has recently exceeded take or pay levels of 4.88 mmcf (138,000 cubic metres) per day. 

ENEO and Victoria’s subsidiary, Gaz du Cameroun (GDC), reached a deal on December 21 on resuming gas supply. The deal will run for three years, with peak delivery of 6.1 mmcf (173,000 cubic metres) per day, with an 80% minimum take or pay basis. 

Under the previous contract, the take or pay minimum was 90% during the dry season, from January to June, and 30% during the wet season. 

ENEO has agreed to a sales price of US$6.75 per mmBtu (US$186.7 per 1,000 cubic metres), which will increase by US$0.1 per mmBtu (US$2.8 per 1,000 cubic metres) every year. Under the first contract signed with ENEO, in December 2014, the utility agreed to pay US$9 per mmBtu (US$249 per 1,000 cubic metres). 

Victoria went on to say that while grid power would be a “key strategy”, the board was also working to diversify its customer base, in order to reduce its dependence on any one customer. Consumers include other power producers, with Victoria hoping to reach at least one agreement on a new power project in Douala this year, and also seek new buyers. These might include industrial power and an agreement on CNG offtakers, which might involve supplies being provided to communities living off the grid, via its Energy Well programme. 

The company has completed gas sales agreements with 11 customers and signed deals with another four, with seven more expected to sign in the near term. Industrial power consumers might be consuming more than 4.5 mmcf (127,000 cubic metres) per day, with no seasonal variations and at prices of around US$13 per mmBtu (US$360 per 1,000 cubic metres). 

 

Edited by

Ed Reed

Editor

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