By SHIRLEY MAULUDU
THE K2.7 billion (US$800 million) Pasca A gas project in Gulf is expected to get off the ground soon following talks last week between the State and developer Twinza Oil Ltd.
Petroleum Minister Kerenga Kua yesterday described the deal reached between the State negotiating team (SNT) and Twinza as the best by far in terms of petroleum resource development in the country.
“We delivered an agreement within the petroleum space, which is a new precedent from the existing projects,” he said.
The project is 95 kilometres south of Gulf and 100 meters under the surface.
Kua said the volume of reserves was 0.4 billion cubic feet.
“This project throughout its life will give us a total benefit package of 55 per cent, calculated on what financial modellers, and economists called as nominal cash flow basis,” he said.
“The project’s lifespan will be about 12 years.”
Kua said the 55 per cent was based on the oil price of US$50 (K171.47) per barrel.
The 55 per cent is made up of 2 per cent royalty, according to the Oil and Gas Act (1998).
There is no specific landowner as the resource is offshore.
Benefits will go to the Gulf provincial government.
“One thing about the 2 per cent royalty is that unlike existing projects, it’s the net after other deductions, that landowners are given the remaining or nothing at all in a year,” Kua said.
“This won’t happen in this project.
“This 2 per cent will be from the gross production, not net of deductions.”
Other benefits include:
- FIVE per cent production levy from gross revenue;
- TWO per cent development levy on gross revenue;
- 15 per cent additional profit tax at 15 per cent accumulated rate;
- 5 per cent LPG for domestic market obligation; and,
- 30 per cent corporate tax.
Twinza country manager Roppe Uyassi told The National yesterday that the project’s front end-engineering design (Feed) should begin in the third quarter of the year.
“Final investment decision (FID) should be made in the fourth quarter of 2022 with the first production planned for the third quarter of 2025,” he said.