Name and Location
African Renaissance gas pipeline project, Mozambique.

Client
SacOil Hoildings announced in December 2014 that it had entered into a joint development agreement (JDA) with the Public Investment Corporation PIC and the Instituto de Gestão das Participações do Estado (IGEPE).

The JDA set out the terms for an evaluation of the technical and commercial feasibility of building a gas pipeline and distribution facility intended to carry natural gas from Mozambique’s Rovuma fields to South Africa, with off-takes to other neighbouring Southern African Development Community countries.

SacOil in March this year reported that a cooperation agreement had been signed between the national oil and gas company of Mozambique – Empresa Nacional de Hidrocarbonetos (ENH), a Mozambique private-sector consortium Profin Consulting Sociedade Anónima, Chinese and international pipeline construction company China Petroleum Pipeline Bureau (CPPB), and SacOil.

ENH, the main statutory agency responsible for the development of Mozambique’s hydrocarbon industry, replaces IGEPE.

Project Description
The project involves the construction of 2 600-km-long, large-diameter pipeline to transport natural gas from Mozambique’s Rovuma basin to Gauteng, in South Africa.

The project is designed to make energy affordable to a greater portion of the population, promote clean energy, reduce oil import bills, and lower carbon footprint and carbon tax.

Value
$6-billion. The project will be 70% debt-financed by Chinese and international banks, while the remaining 30% will be equity-financed, part of which will be covered by CPPB.

Duration
Construction is expected to start in 2018, following a final investment decision.

The pipeline could be completed within three years of construction, making the gas delivery date between 2020 and 2021, depending on the final investment decision by the upstream operators. However, the processing facility is likely to be completed within two to three years.

Latest Developments
The project is progressing to the prefeasibility study (PFS) stage, which could take about 18 months to complete.

CPPB will act as the lead technical expert on the project. Besides providing technical input, SacOil will primarily focus on addressing any regulatory issues and will also work closely with the firm appointed to provide the scope for the environmental-impact assessments.

SacOil, CPPB, Mozambique’s national hydrocarbons company (ENH) and Mozambique private-sector consortium Profin Consulting will be involved in the gas distribution.

“The terms and agreements concerning the level of ownership and distribution rights are currently being discussed as part of the joint venture agreement,” SacOil CEO Dr Thabo Kgogo has said, adding that, once the PFS has been completed, a project-implementing company will be established. Thereafter, equity portions for the pipeline will be allocated to the various companies, offering SacOil and CPPB an opportunity to generate income through the supply of natural gas to markets near the Rovuma basin.

Key Contracts and Suppliers
CPPB (lead technical expert).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
SacOil Holdings, Damain Matroos, tel +27 10 591 2260.
ENH, tel +258 21 42 94 56/67, fax +258 21 32 48 08 or email info@enh.co.mz.
CPPB, tel +86 316 217 1812 or email cppmarket@cnpc.com.cn.