Oil and gas exploration and production firm New Age has signed a letter of intent (LOI) with Victoria Oil & Gas (VOG).
The LOI covers the supply of gas from the Etinde gas and condensate field in offshore Cameroon.
New Age serves as the operator of the Etinde gas field, holding 37.5% interest. Other partners include LUKOIL (37.5%) and Bowleven (25%).
Under the LOI, New Age will supply processed gas to Gaz du Cameroun (GDC), a wholly-owned subsidiary of Victoria Oil & Gas in Limbe, based in western Cameroon.
GDC will then transport the gas received from Etinde field to Douala.
Bowleven CEO Eli Chahin said: “As we work towards making a final investment decision on Etinde this year, today’s announcement by VOG is a positive step towards reconfirming the commerciality of the licence.
“The agreement is also positive for Cameroon, as it will see gas delivered to independent power suppliers in the country, and for our stakeholders, as it demonstrates the high demand for natural gas in the region. We look forward to updating the market on future progress as appropriate.”
The gas sale agreement would be valid for 20 years. New Age will supply a minimum of 25 million standard cubic feet per day (mmscf) of gas to GDC. After the first three years, this will increase to a minimum of 30mmscf a day.
Bowleven said that the LOI will be effective until a gas sales agreement is signed. It expects this to take place by March 2021.
The deal remains subject to a Final Investment Decision (FID). This covers the development of the Etinde gas and condensate field.
In March 2015, Bowleven sold a 40% stake in its Etinde permit in a deal worth approximately $250m. It sold a 30% stake to Lukoil and a further 10% to NewAge.
Bowleven retained a 25% interest after other farm-out transactions, transferring the Etinde field operatorship to New Age.