The Mnazi Bay field in Tanzania produced 70.29 million cubic feet (1.99 million cubic metres) per day in 2019, according to Wentworth Resources, predicting output would remain static in 2020.
Gross volumes this year are guided to fall from 65 to 75 mmcf (1.84-2.12 mcm) per day. Wentworth noted a gas sales agreement has been reached with Tanzania Petroleum Development Co. (TPDC) in September 2019. This included a take-or-pay provision set at 85% of the daily committed quotient, of 80 mmcf (2.27 mcm) per day.
As such, should volumes for the year fall below 68 mmcf (1.93 mcm) per day, the take-or-pay clause will kick in. This excludes a small amount of gas that is sold locally, in Mtwara.
Mnazi Bay partners sell gas primarily via the Mtwara-Dar es Salaam gas pipeline system, also known as the National Natural Gas Infrastructure (NNGI) project. Gas production from the field faced competition in 2019 from above-average hydropower and rival gas sales, from Orca Exploration’s Songo Songo project.
Orca’s Pan Africa Energy Tanzania (PAET) unit reached a new gas sales agreement via the NNGI system in December 2018. Increased demand will be split between the two fields, Wentworth predicted, until PAET reaches the upper limits of its contract, which allows up to 30 mmcf (850,000 cubic metres) per day of gas to be sold. Beyond this point, the Mnazi Bay partners expect to meet additional demand.
Wentworth’s CEO Katherine Roe noted success in repairing a flowline and recompleting a well, predicting this would “allow Mnazi Bay to sustainably increase production to satisfy demand from the Tanzanian market. Despite a challenging 2019, we met our revised production guidance and have exited the year in a strong operational position and continue to fully align ourselves with the objectives of the government and our JV partners.”
Work on the MB-2 flowline and the recompletion of the MB-4 well will allow the field to produce more than 100 mmcf (2.83 mcm) per day on a sustainable basis, Wentworth said.
The company made the final payment of $1.67 million on its long term debt at the end of January and had $13.5mn as of the end of 2019. Costs this year net to Wentworth are expected to be $4.6mn. Balance sheet strength, and regular payments, has allowed Wentworth to “return cash to shareholders via our dividend policy”, Roe said.
Plans for a 2019 dividend will be set out with Wentworth’s results, due in April. The company paid a first divided, totalling $1mn, in 2019, while also making $7.3mn in debt repayments. Orca also recently announced plans to pay dividends and return cash to shareholders.