Edirne Gas Plant construction complete in Turkey

Otto Energy Limited reported that the construction of the Edirne Gas Plant System has been completed in Turkey. 

Gas sales will commence following completion by BOTAS, the state‐owned pipelines and trading company in Turkey, of a hot tap on its 14” main line to create the delivery point for the Edirne gas. The Joint Operators are in the process of retrofitting the hot tap fitting to accommodate Botas’ requirements. 

The hot tap is expected to be completed near the end of March with first gas sales shortly thereafter. 

Otto has finalized gas gathering and tolling agreements with the Joint Operators of the Edirne Gas Plant to process the gas from the Edirne Fields which is jointly owned with Otto. As previously announced, all gas production from the Edirne license will be sold via dedicated sales arrangement to AKSA Dogalgaz Toptan Satis A.S at a 15% discount the Industrial Interruptible Tariff benchmark set by BOTAS and Otto has elected not to participate in the Gas Plant ownership. Otto expects that the discounted gas price in the short 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. 

The Edirne Joint Venture partners comprise Otto which holds a 35% interest in the Edirne License and Joint Operators Transatlantic Mediterraean Int (TEMI) (55%) and local Turkish company Petraco (10%). 

Phase 2 Drilling Program 

The third exploration well in the phase 2 drilling program, Yolboyu‐1 well reached a total depth of 2,000 meters (m) on 15 March 2010. Preliminary evaluation of well logs indicates the potential of gas in the Upper Danismen Formation and the well will be suspended for future evaluation. The Operator is preparing to move the rig next well, Somurcali‐1. 

Otto in Turkey 

Otto holds a 35 percent interest in the Edirne License onshore Thrace Basin of Western Turkey. The Edirne license was originally acquired by Otto in 2004 but is now a non operated asset, operated by joint venture partners Petroleum Exploration Mediterranean Int. (55%) and a local Turkish company Petraco (10%). 

To date, seven gas discoveries have been made on the license for a total of approximately 10-20 Bcf (gross) of discovered gas. Well testing was successfully completed in June 2008 and testing has continued in June/July 2009. 

Otto Energy and its joint venture partners have awarded two contracts for the design and engineering of a gas processing plant and pipeline for the development of the Edirne gas fields in Western Turkey. 

The Turkish Energy Market Regulatory Authority (EMRA) granted the JV a wholesale gas license. The JV will be the first to produce and sell onshore Turkish gas directly into the extensive "Botas" gas distribution network, which enables the sale of gas anywhere in Turkey for the best possible price, at a discount to the Botas price. 

Negotiations for Gas Sales Agreement is underway and then development of the field with production expected to commence in Q1 2010. This low cost exploration and development project is teamed with a good fiscal regime and a robust domestic gas price. It will become Otto's second producing asset and source of cash flow.



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