CanArgo Energy Corporation Announces Breakthrough Gas Contract with AES Telasi

Strategic Insights -

CanArgo Energy Corporation, a leading independent oil and gas exploration and production company, announced a significant breakthrough in its gas production plans with AES Telasi, the owner and operator of the electrical grid in Tbilisi, Georgia. Under the terms of the agreement, AES Telasi will purchase all the gas produced by CanArgo's subsidiary, Ninotsminda Oil Company, at a fixed price of $38 per thousand cubic meters plus a quality differential.

This agreement is a crucial step for CanArgo as it enables the company to fully implement its concurrent production plan, which aims to increase oil production while also producing natural gas. The gas produced will be used in the Gardabani thermal power plant, the largest thermal power plant in Georgia, located 30 km from Tbilisi and 50 km from the Ninotsminda field.

Key Takeaways:

  • CanArgo Energy Corporation has signed a gas contract with AES Telasi, the owner of the electrical grid in Tbilisi, Georgia, which will purchase all the gas produced by Ninotsminda Oil Company at a fixed price.
  • The gas produced will be used in the Gardabani thermal power plant, the largest thermal power plant in Georgia, located near the Ninotsminda field.
  • The contract has no maximum or minimum volume, and payments will be made in US dollars directly to Ninotsminda Oil Company's Western bank account.
  • The term of the contract is one year, and natural gas sales are expected to commence as soon as regulatory approval is received, anticipated prior to the end of 1999.
  • CanArgo's Chairman and CEO, Dr. David Robson, expressed confidence in the company's ability to fully implement its concurrent production plan, which will increase oil production while producing natural gas.
  • AES Telasi is a 75%subsidiary of AES Corporation, the world's largest global power company, with assets exceeding $10 billion and operations in 16 countries.

Statistics:

  • Price of gas: $38 per thousand cubic meters plus a quality differential.
  • Gross price of gas (including quality differential): approximately $1.20 per thousand cubic feet.
  • Term of the contract: one year.
  • Number of customers served by AES Telasi: approximately 370,000.
  • AES Corporation's total assets: over $10 billion.
  • Number of countries where AES has operating assets: 16.
  • Total plant capacity of AES Corporation: 111 plants totaling over 36,000 megawatts.

Sources:

  • Business Wire
  • OTC BB: GUSH
  • OSE: CNR
  • AES Corporation
  • CanArgo Energy Corporation
  • Ninotsminda Oil Company
  • Georgian Oil
  • AES Telasi