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Commercial Developments, Gaz du Cameroun

8 Jan 2014

Commercial Developments, Gaz du Cameroun

Victoria Oil & Gas Plc, the emerging African energy utility company, today announces the signing of key customer agreements that places Cameroon operating subsidiary, Gaz du Cameroun (“GDC”), in a strong position to expand gas production volumes.

Highlights

  • AES-Sonel (electricity utility) collaboration agreement for conversion of Heavy Fuel Oil (“HFO”) to gas power generation.
  • Dangote (cement manufacture) agreement for thermal power provision reached, Q2 2014 connection anticipated.
  • SOCAVER (glass manufacturer) connection review and commissioning by engineers from Germany, scheduled for January 2014.
  • First cash call of US$4.1m received from RSM, following the ICC Arbitration Award.
  • All six 1.5MW  Caterpillar Gensets cleared from Customs

Commercial Developments

The Company’s operating subsidiary, Gaz du Cameroun is pleased to announce a number of important commercial developments:

Cameroon has an installed power generating capacity of about 1200MW. Of this, 732MW is supplied from hydro-electric plants. Approximately 192MW is supplied into the Douala region from HFO and Light Fuel Oil (“LFO”). A collaboration agreement with AES-Sonel, the sole electric utility in Cameroon has been reached whereby GDC and AES-Sonel will work on a technical and operating plan to progressively replace HFO and LFO power generation stations with gas fired generation. This collaboration on power generation is a first in Cameroon.  It is planned that GDC will initially supply temporary units with gas, with a combined capacity of 45MW. This first stage is expected to be online during Q2 2014 with anticipated gas consumption in the range of 2.6 to 5.9mmscf/d. AES-Sonel is preparing a study of the conversion of the 13MW Logbaba  and the 86MW Dibamba Heavy Fuel Oil power plants to gas.

GDC has also reached an agreement with Dangote, the large cement manufacturing company, to supply thermal gas for its operations. GDC anticipates customer connection to be completed during Q2 2014 and gas consumption to range from 0.4 to 0.5mmscf/d

Year end daily production levels remained in the 2.5 to 3.0mmscf/d range because the SOCAVER plant was not commissioned as expected and some customers had significantly reduced consumption over the holiday period.  In particular our largest customer had an unscheduled plant shutdown but is due back online this month.

Glass manufacturer SOCAVER, part of the SABC group has now secured engineers from Germany to commission the burners installed on its boilers. Expected gas consumption is 0.4mmscf/d.

All six 1.5MW gas fired portable generators (Gensets) have now been cleared through customs and will be installed in customer factories.

Cash Call received from RSM

Following VOG’s RNS on the ICC Arbitration Award announced on 13 December 2013, the Company has received the pending cash call of US$4.1m from RSM. Further cash calls have been submitted to RSM.

Kevin Foo, Chairman said; “Supplying the major domestic electricity utility with gas to drive their oil fired generators will be a big step forward for us. With most electricity coming from hydro-electric sources in Cameroon, consistent power supply during the dry season is an issue. Our engineering team will be working with AES-Sonel to create a practical conversion programme. The clearing of our Gensets through customs now enables us to install them at customer’s plants and further increase gas production.”

For further information, please visit www.victoriaoilandgas.com or contact:

Victoria Oil & Gas Plc

Kevin Foo/Chané Brooks/Laurence Read Tel: +44 (0) 20 7921 8820

Fox-Davies Capital

Daniel Fox-Davies Tel: +44 (0) 20 3463 5010

Strand Hanson Limited

Angela Hallett / Stuart Faulkner Tel: +44 (0) 20 7409 3494

Tavistock Communications

Ed Portman / Conrad Harrington / Simon Hudson Tel: +44 (0) 20 7920 3150