AIM-quoted Victoria Oil & Gas Plc (“VOG” or “the Company”) has pioneered the monetisation of onshore gas in Cameroon from its 57% owned Logbaba gas and condensate project. Through the Company’s wholly-owned subsidiary and operator of the project, Gaz du Cameroun S.A. (“GDC”), a 50km gas distribution pipeline network has been built feeding gas to a range of industrial customers situated in Douala, the gateway port city to Central Africa. GDC delivered 3,684mmscf in the year to 31 December 2017 (3,566mmscf to customers in the year to 31 December 2016) and is able to set prices on a purely commercial basis with no restrictions on sales set by Government. The Logbaba gas and condensate project is an example of onshore gas monetisation in Sub-Saharan Africa, with energy provision clearly aligned with national interests.
GDC estimates demand for gas in Cameroon for thermal and power generation to be in excess of 150mmscf/d. GDC is currently providing clean, reliable gas to major industrial customers such as Castel Group, Guinness, Dangote and the key power provider, ENEO Cameroon S.A. (“ENEO”), which provides over 50MW of power to the Douala grid. ENEO alone requires an additional 50 to 80MW of power per year for the next five years.
GDC is currently the only supplier of natural gas to Douala and it owns and manages the whole supply chain from wellhead to customer connection. GDC is largely insulated from oil price fluctuations because it competes with fuel sources such as heavy fuel oil on many different criteria other than supply price. GDC has in place long-term gas supply contracts with customers using gas for a range of different applications, with prices ranging from $9/mmbtu to $16/mmbtu. GDC has secured its position as a dominant gas supplier to industry in Douala. The Group’s strategy for GDC is to focus on the safe delivery of gas to the optimum, long-term market. GDC intends to maintain its position by leveraging its experience, as well as its gas processing and pipeline assets. GDC is focused on exploiting new gas reserve discoveries and opening up major new power-hungry markets in the region and beyond.
VOG has signed agreements to add to its 20 square kilometre exploitation licence at Logbaba. An assignment of 75% of the neighbouring 1,235 square kilometre exploration block Matanda and 80% of 2,237 square kilometre Bomono block increasing its footprint in Douala, Cameroon. Both of these assignments are subject to Government approvals.