Victoria Oil & Gas report the successful installation and commissioning of production facilities and a gas pipeline network in Douala. Rodeo Development Limited, the Company's wholly owned Cameroon subsidiary, made its first delivery of gas to customers on the Magzi Industrial Estate on the 17 December 2011.
VOG's Executive Chairman Kevin Foo commented, "This is a very significant milestone for the Company. We have now moved from an exploration and development company into a producer. The development of Logbaba is also important news for the city of Douala. The commissioning of two wells, production facilities and the first stage of the pipeline was successful and without incident.
This achievement is the culmination of three years of tireless effort by the team and strong support from shareholders and the Government of the Republic of Cameroon. I am very pleased that we have met our promised target of first production in Q4 2011."
Logbaba has gross proved and probable reserves of 212 billion cubic feet of gas and 4.2 million barrels of condensate. VOG has a 95 per cent. working interest and is the operator. The Company has two wells completed as producers. The first well, La-105, tested at rates of up to 55mmscf/d and 1,000 barrels per day of condensate and the second well, La-106, tested at rates of up to 22mmscf/d and unmeasured amounts of condensate. The Company estimates that there are additional prospective resources in excess of 1 trillion cubic feet of gas with associated condensate within the exploitation area.
The Logbaba field has been developed as a fast track project with gas production start-up to the first customer hub while the remainder of the pipeline network continues under construction. The Company anticipates installation of its entire 34km pipeline network, east of the Wouri River, by mid 2012, serving four main industrial hubs.
The Company anticipates gross gas production volumes to rise to a plateau rate of 44mmscf/d by the end of 2014 from 8mmscf/d anticipated by the end of the first year of operations as all initial thermal customers are brought on stream. The pipeline has an operating capacity of 60mmscf/d, which the Directors anticipate to be of sufficient size to satisfy the Douala industrial market over the medium term. Condensate separated from the gas at the production facilities will be stabilised and trucked to the Sonara refinery at Limbe, located 60km away.
Gas and Condensate Sales
In parallel with the development activity this year, gas sales agreements have been signed with 13 industrial customers, including a number of multinational firms. Contract prices have been fixed at $16 per million British thermal units for the first five years with price re-sets thereafter. A further 10 gas sales agreements are anticipated to be agreed in early 2012 as the pipeline network expands from the first customer hub in the Magzi region onto the second customer hub in central Douala.
Condensate sales are anticipated to be 160 barrels of condensate per day by the end of 2012, rising to 880 barrels per day by the end of 2014.