SacOil, the Public Investment Corp. SOC Ltd. (PIC) and the Instituto de Gestão das Participações do Estado (IGEPE) signed a joint development agreement (JDA) to evaluate the technical and commercial feasibility of a transnational terrestrial gas pipeline and distribution facility that will carry natural gas from Mozambique’s offshore Rovuma fields into South Africa, with off-takes to other neighboring Southern African development community countries.
The feasibility studies will cover engineering, market development, gas purchasing, economic, financial, technical and commercial risk profiles as well as environmental, social and regulatory issues. The JDA partners are currently setting up a technical working group (TWG) to begin pre-feasibility studies.
The project is estimated to cost US$6 billion and is aimed to be designed to make energy affordable to a greater proportion of the population, promote clean energy, reduce oil import bills, lower carbon footprint and carbon tax, all of which are challenges experienced by the economies of southern Africa. It is the JDA partners expectation that the project will be transformational to Africa’s energy infrastructure landscape, as well as supportive of economic growth across the region. The project will also seek to increase the international competitiveness of southern African economies, create many jobs and improve living standards for the people of the region.
If constructed, it is proposed that the 2600km main pipeline from northern Mozambique to South Africa will, en route, deliver gas to key towns and settlements in all provinces of Mozambique, thereby stimulating industrial growth in the country. The indicative gas requirements of, as well as benefits to, Mozambique and South Africa appear to justify such a pipeline.
"The Mozambique gas project is key for the economic transformation of Southern Africa,” says Dr. Thabo Kgogo, SacOil CEO. “Our participation is in line with SacOil’s long term strategy of being a leading Pan African oil and gas company.”
The Southern African energy market has been constrained by shortages for many years. Natural gas accounts for a very small portion of the energy demand in South Africa (3% versus 21% globally). The South African Government has stated its objective to reduce CO2 emission levels and to increase the use of natural gas (PwC 2012, The Gas Equation Report). The demand for natural gas is also expected to grow in Botswana, Malawi, Mozambique, Zambia, Zimbabwe and Africa in general. The main driver of this demand for gas is expected to be from gas-fired power stations, vehicle and related downstream industries and domestic consumption.
The gas market in South Africa, which is the industrial powerhouse of Africa, is driven by demand from the Saldanha Industrial Development Zone, the Mossel Bay gas-to-liquid plant, the Mossel Bay and Atlantis diesel-fired power stations, an array of ageing coal-fired power stations, which could be converted to gas, as well as possible new power stations in Coega and Richards Bay.
Image from EIA.
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