admin
While global energy demand has dived due to Covid-19, Invictus Energy is perfectly placed to address Southern Africa’s chronic shortage of power.
Invictus Energy is an Australian listed company exploring oil and gas in Muzarabani and has covered major strides on the project, including encouraging evidence from secondary data gathered by oil giant Mobil in the early 90s and environmental permission to start seismic studies.
The company is at advanced stages of negotiating a production sharing agreement with the Government and inserting the relevant provisions of the Petroleum Act to cover new issues relating to oil and gas.
Most of Southern Africa’s power generation capacity comes from coal-fired power stations fuelled by the abundant coal resources present in the region.
However, some of these are now between 40 and 60 years old and coming to the end of their lives and coupled with a lack of investment in new generation capacity has resulted in rolling blackouts.
Invictus Energy managing director Mr Scott Macmillan told Stockhead about 20 percent of South Africa’s generation capacity would be retired in the next five to 10 years.
Other plants have been affected by faults caused by a lack of proper maintenance, with Macmillan adding that the most recent coal-fired plants constructed were over-budget, behind schedule and plagued by complications.
This has certainly not been helped by the global move away from coal.
“When you are looking at new power generation, lenders are very wary of financing new coal-fired power, and now they also have issues with the existing coal-fired power because they don’t meet emissions standards and they have to be retired,” Macmillan explained.
This has seen South Africa endure its worst power cuts on record. South Africa’s Council for Scientific and Industrial Research estimated that 1 498 gigawatt hours (GWh) of energy had been shed so far in the first eight months of 2020, more than the 1 352GWh shed in the whole of 2019 and 1 325GWh in 2015 and cost the South African economy an estimated US$7,2 billion last year alone.
While renewable energy is certainly able to pick up some of the slack, reliable base load power is still required to really drive the economy.
And this is where gas comes into play.
“What South Africa is looking to do is increase its use of gas in the generation mix, they have already embarked on retrofitting some of their diesel-fired power plants to gas, and they are also looking at repurposing some of these coal power stations to gas and bringing in new gas generation capacity,” Mr Macmillan explained.
He said gas-fired plants were not only cheaper than their coal-fired counterparts, they also cost less to build and were scalable.
Benefits of adopting gas
Tanzania’s adoption of gas fired power has been a tremendous success and led the country in saving funds worth US$4 billion between 2015 and 2017 and is a prime example of how economies can benefit from the adoption of gas to power.
“That’s going to play a big part in the future generation capacity, this is why gas is becoming increasingly more and more important,” Mr Macmillan said.
South Africa’s power issues have also impacted its neighbours.
While they could previously rely on excess generation capacity from South Africa in times of need — such as when drought impacts on hydropower, their southern neighbour’s power woes mean it has to address any slack on its own.
Zimbabwe project is perfectly placed to benefit Invictus as it is positioned to take advantage of this move towards gas.
The company recently received key environmental approvals that allow it to kick off seismic acquisition and exploration drilling at its Cahora Bassa project in Zimbabwe, which has the potential to host multi-trillion cubic feet of gas.
It has also inked two supply deals covering maximum gas supply of 730 billion cubic feet (Bcf) of gas, which represents just a small slice of the project’s gas potential.
This includes a non-binding MoU with Tatanga Energy to jointly investigate the economic and commercial viability of supplying gas to Tatanga’s proposed 500-megawatt (MW) plant.
“The proximity of our Cahora Bassa project to the major interconnectors of the Southern Africa Power Pool (SAPP) means that Invictus can develop a gas to power project on site, connect to the grid and be able export power anywhere within southern Africa.
“This allows us to target a massive and energy hungry market from our own doorstep.”
“We are short cutting all of the development stuff and getting everything done up as soon as we know that we have been successful with our exploration programme,” Mr Macmillan noted.
He added the company had been finalising its production sharing agreement with the government.
“This will provide a stable and transparent legal and fiscal framework that will govern the project from cradle to grave,” Mr Macmillan said.
“That is important because it affords us all of the rights to develop the project post discovery and helps put in some fiscal and non-fiscal benefits for the project and also create the pathway for development that will ensure it is fast-tracked. — Stockhead.com/Business Reporter.
Online Reporter