Otto Energy announced that the Edirne Joint Venture (EJV) has secured a five-year Gas Sales Agreement for all gas production from the Turkish Edirne License.
This long term gas sales agreement provides the EJV with a certain market for both its current gas reserves while also allowing for the monetization of its new gas discoveries on the licence area. The EJV has no supply commitments under the GSA and therefore no risk on gas deliverability.
The Edirne Project has gross 2P Reserves and 2C Resources of approximately 8.5 Bcf (Otto's share 3 Bcf) and is expected to have initial production rates of between 10 to 14 mmscf per day commencing in early 2010.
The gas produced by the EJV will be sold downstream of the gas plant at a 15% discount to the Industrial Interruptible Tariff benchmark set by BOTAS. Otto expects that the discounted gas price in the short to medium term will be between US $7.00 to US $8.00/ GJ. The discounted gas price will change over time reflecting amendments in the tariffs set by BOTAS. An active drilling program is planned for 2010 on existing and new 3D seismic coverage.
Subject to ongoing exploration success gas will continue to be sold under this contract on the agreed commercial terms.
The Gas Sales Agreement is with AKSA Dogalgaz Toptan Satis A.S (AKSA), an established natural gas distributor in the Republic of Turkey.
The EJV partners comprise Otto which holds a 35% interest in the Edirne License and Joint Operators Petroleum Exploration Mediterraean Int (PEMI) (55%) and local Turkish company Petraco (10%).
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