South African energy firm Sasol plans to spend $1.4 billion on the first phase of its oil and gas project in Inhassoro which should enter operation in 2021 if the company can finalise sales agreements which it says are currently in progress.
The Mozambique government gave Sasol approval in January this year to build an integrated oil, liquefied petroleum gas (LPG) and gas project adjacent to its existing gas-producing projects in Inhambane province. Phase one will also see the company develop a fifth train at the existing gas processing facility, to process the additional gas from the new development. Timelines for the project “are dependent on successful negotiations of various off-take agreements that are currently in progress,” Sasol said today.
The Mozambique development is a bright spot in the company’s international exploration and production development which registered a loss of ZAR 6.7 billion (US$436m) in the second half of 2015, according to its latest financial results, released today, 7 March. The main reason for the loss was a heavy write-down of the value of a Canadian shale gas project, thanks to the falling gas price in North America.
Sasol’s Mozambican operation made a profit of ZAR 437 million over the six months to 31 December 2015. Production volumes increased by 8%, thanks in part to selling an extra 4 billion cubic feet of gas to the 175 MW Central Térmica de Ressano Garcia power station. The station, which lies on the Mozambican side of the border with South Africa, is a joint venture between Sasol (49%) and Mozambique’s electricity utility EDM (51%).
Sasol is also investing ZAR 2.7 billion in expanding its pipeline to take Mozambican gas to Sasol’s processing plant at Secunda, South Africa. The pipeline expansion known as Loop Line 2 will enter operation in the second half of this year, and will expand gas transport capacity from 169.4 billion standard cubic feet (bscf) to 191 bscf per year.
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