Mozambique's state owned Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) and South Africa's Sasol Ltd., Johannesburg, plan a $700-850 million joint field development project.
Pande gas field in Mozambique, which lies 20 km inland and 600 km northeast of Maputo, will be developed to supply gas by pipeline to markets in the Johannesburg area.
A Sasol official said Argentine company Pluspetrol SA has been brought in as operator of field development. A pipeline company also is being sought to join in the project with a minority interest in the field.
Pipeline companies have been approached by ENH and Sasol, which expect to select a partner in September. ENH and Sasol expect to begin development as soon as the pipeline partner is chosen.
Pande field interests have not been settled, although ENH and Sasol will almost certainly be major shareholders under a production sharing agreement.
PANDE FIELD
Pande field was discovered by Gulf Oil Corp. in 1961, but development was hampered by Mozambique's unstable political situation, said project financial adviser Morgan Grenfell & Co. Ltd., London.
The bank said ENH began appraisal of the field in 1989 and concluded in 1991 that field development was viable. An agreement with Sasol in February 1992 was said to be key because Mozambique's gas market is small.
"While Sasol is likely to invest in the upstream field development," said the bank, "its most important role will be to offtake most of the gas under a long term take or pay contract, develop the local market, and build the distribution system."
Eleven wells drilled so far have proven Pande field reserves to be about 1.7 tcf of gas. The gas is said to be dry, high in methane content with no sulfur. Sasol said further appraisal drilling is planned, with the intent to confirm more reserves before development proceeds.
Morgan Grenfell said reserves discovered to date are expected to support projected market demand for at least 20 years.
GAS PIPELINE
The ENH-Sasol combine plans to lay a 905 km pipeline from Pande field to Secunda, 100 km east of Johannesburg. About two thirds of the line will be in Mozambique and the rest in South Africa.
Morgan Grenfell said the proposed pipeline route is via the Ressano Garcia/Komatipoort border crossing, with a spur line to Durban and offtakes to Nelspruit, Ngodwana, Bethal, and Pretoria and a lateral line to Maputo.
Two spur line options are being considered: a 605 km line from Ressano Garcia to Durban via Maputo and a 540 km line from Badplaas in the Transvaal to Durban with a separate spur to Maputo.
Capital cost of the pipeline is estimated at $400-500 million, including compressors. Line diameters will range from 16 to 24 in.
Design, procurement, construction, and commissioning of the system are expected to take about 28 months.
ENERGY MARKETS
Morgan Grenfell estimates South Africa's total primary energy demand is 84 million metric tons/year of oil equivalent. Coal is estimated to provide 80% and is used to produce electricity, gasoline, diesel fuel, and fuel gas.
The Johannesburg area is said to hold 45% of South Africa's urban population and 45% of the country's industrial capacity.
"The South African energy market expects significant growth rates in coming years, and consumers are eager to investigate the use of gas," Morgan Grenfell said.
"Detailed market surveys conducted recently by Sasol suggest a penetrable market for gas of 64 bcf/year, mostly in the paper, metals, mineral processing, and chemicals sectors."
The bank said 76% of potential gas customers currently use coal, with gas derived from coal the second largest energy source.
Total gas use in the Maputo area is predicted to reach 19 bcf/year by 2010, with nearly 15 bcf/year being required for power generation and the remainder for industry.
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