ASX-listed Kinetiko Energy (and its subsidiary, Afro Energy) and South African industrial heating fuel supplier FFS Refiners have entered into a binding joint development agreement (JDA) for a pilot gas plant to produce liquid natural gas (LNG). The plant will be located at Kinetiko’s Brakfontein project, also known as Project Alpha, in Mpumalanga province.

“Kinetiko and FFS have been working together for some time to plan a framework using the complementary skill sets of both companies for providing gas produced from a field of wells at Brakfontein to eager South African customers,” reported Kinetiko chairperson Adam Sierakowski. “The execution of the JDA crystallises this vision as the parties co-fund the first phase and work to complete an LNG business case to develop an initial cluster of wells capable of driving an LNG liquefaction plant producing 5 000 t/y. With the recent flow testing success of two Brakfontein wells, timing is ideal to formalise this JDA and ultimately work with FFS to scale the relationship to producing 125 000 t/y.”

The JDA marks the start of Phase 1a of the Brakfontein project. This includes, among other things, the drilling of five more production wells and the upgrading of the existing production wells; the testing of the gas; the appointment of a competent person to certify the gas reserves; the drawing up of a LNG business case for the further development of the gas field; joint application for a production right; and, the setting up of a JDA steering committee to supervise and direct the proposed development.

“FFS is excited to continue its collaboration with Kinetiko to extend the exploration activities undertaken thus far to small-scale LNG production via a staged investment programme,” affirmed FFS MD Andrew Canning. “This initiative represents an important element of FFS’ diversification strategy in meeting its vision of creating sustainable energy solutions. Our respective teams have embraced a common ethos of diligent preparation and collaboration and we look forward to Project Alpha evolving as a significant contributor to the Southern African energy market.”

For Phase 1a, the partners have committed R64 312 000 (or A$5 675 000). This is divided into two elements. The first, of R20 000 000, will be divided between Kinetiko and FSS 67.5%:32.5% (or R13 500 000 from Kinetiko and R6 500 000 from FFS). The rest (R44 312 000) will be supplied by the two companies on a 50:50 basis. (Note that Kinetiko has already spent a “significant portion” of its contribution.) 

Phase 1b will be the proof-of-concept stage of the project, achieving an LNG production capacity of 5 000 t/y. Phase 2 will see full LNG production, with a plant capacity of 25 000 t/y. And Phase 3 would see gas production increased by including other Kinetiko tenement areas, and the expansion of the LNG plant capacity to 125 000 t/y.