USD 760 million Mozambique Gas Project to provide Additional Supply to South Africa

 

South African energy group Sasol has announced its final investment decision (FID) on a USD 760 million gas project in Mozambique, that will provide additional supply to South Africa in the short term.

According to a release by Sasol, on 19 February 2021 the company´s Board approved the FID on the Mozambique production sharing agreement (PSA) license area, with total project cost estimated at USD 760 million.

The project, the company adds, will entail Mozambique in-country monetisation of gas through a 450 megawatt gas-fired power plant and a liquefied petroleum gas (LPG) facility in the same time frame.

The balance of the gas produced will be exported to South Africa to sustain Sasol operations.

“The PSA development underpins Sasol’s gas transformation strategy by securing additional gas supply from southern Mozambique into Sasol’s gas value chain starting 2024 and serves as a cornerstone in addressing Sasol’s sustainability agenda”, the company said.

Sasol’s CEO Fleetwood Grobler, speaking on a conference call, said the Mozambique project would provide “additional short-term gas supply to South Africa”.

There may be up to 1.2 trillion cubic feet (34 billion cubic metres) of gas at the PSA licence.

The plan also covers the export of oil, which Sasol puts at 7-21 million barrels of reserves.

Sasol “needs to up our game”, CFO Paul Victor said, in cutting coal use and Mozambique’s PSA is a first step in this direction although it will need to secure additional supplies.

“We’re looking at all options, including LNG and supplies from [Mozambique’s northern] Rovuma Basin, in addition to exploration in Pande Temane. In the next couple of years we will set out steps towards the energy transition, it’s going to involve gas and renewables,” Victor said.

Mozambique’s emerging gas sector faces ‘potential delays’ and cancellation of downstream projects, because of the insurgency in the northern province of Cabo Delgado, according to the Economist Intelligence Unit (EIU).

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