Victoria Oil writes off Russia as Cameroon earnings climb

African utility group Victoria Oil & Gas (LON:VOG) is writing off its Russian gas operation amid political tension between Russia and the West.

VOG has decided to fully impair its West Medvezhye asset by US$49.8mln to focus on its gas supply operations in Cameroon.

The company has considered a potential farm-out, joint venture or sale for West Medvezhye, which it said had significant gas and gas condensate reserves.

But it added: “The current state of relations between Russia and the West, combined with a low oil price, makes near-term development of the asset challenging and we believe divestiture is a more prudent course.

We shall of course, continue to seek partners to derive full value from the asset."

VOG posted revenue for the six months to November 30 of US$11.6mln against US$6mln a year ago while net pre-tax earnings before interest, depreciation and amortisation were $1.4mln versus $200,000 last time.

The company's subsidiary, Gaz du Cameroun (GDC), supplies gas to industries in the Douala region of Cameroon from its onshore Logbaba gas project. It expects to complete development of a power station at the scheme within a fortnight.

Executive chairman Kevin Foo said: “The project is scheduled to be online by the end of the first quarter of 2015 and if this is achieved, as we expect, it will represent a remarkable success.”