SA’s largest on-shore gas project to be developed

On the back of a major gas find near Secunda, Kinetiko Energy and the Industrial Development Corporation have joined forces to develop a Liquefied Natural Gas (LNG) project which will ultimately deliver 500MW of gas-powered energy – making it South Africa’s largest onshore gas project.

Afro Energy, a Kinetiko subsidiary, on Tuesday announced it had executed a non-binding term sheet with the state-owned development financier to co-develop a new joint venture for the appraisal and production of LNG to deliver 50MW, growing to 500MW, gas equivalent energy.

Afro Energy holds the exploration rights for commercial LNG over gas fields located near Secunda in Mpumalanga, where gas has been flowing from boreholes at relatively high production rates for decades.

The unconventional gas is found in both the sandstone and coal formations and a recent independent gas reserves and resources report from Sproule B.V confirmed “positive economics and enormous scalability” of the contingent resource.

Kinetiko is an Australian-listed company which is developing an energy transition solution for South Africa focused on commercialising advanced shallow conventional gas and coal bed methane projects. It said the term sheet underpins Kinetiko and Afro Energy’s strategic objectives to unlock over 2 trillion cubic feet (tcf) in gas reserves and become a sustainable cleaner energy solution for the South African economy.

For comparison, fuel production from PetroSA’s Mossel Bay refinery was sustained over 28 years with 1.5 tcf of gas.

The first stage 50MW equivalent project is estimated to cost approximately AUD 138 million (R1.67 billion), comprising AUD 90 million equity and AUD 48 million debt.

The IDC will equity fund approximately AUD 52 million for 30 percent interest in the JV. Afro Energy will equity fund around AUD 38 million for 70 percent interest. – Fin24