South Africa’s Sasol weighs Mozambique gas project

July 05, 2014 | Africa, Company Operations, LNG & LPG

London, United Kingdom | – South Africa’s Petrochemical giant Sasol is the second company in little more than a week to agree with Mozambican authorities to undertake a study into building a gas-to-liquid (GTL) fuel project in the country.

Sasol told the market on Thursday that it would undertake a joint pre-feasibility study into the plant with Mozambique’s state-owned oil company Empresa Nacional de Hidrocarbonetos (ENH) and Italian multinational Eni.

The duration of the study, which precedes a bankable feasibility study if the economics stack up, is unknown, as is the size of the plant, which will primarily produce diesel.

The size, location, cost and timing of the plant would all be determined during the course of the study, said Sasol spokesman Alex Anderson.

He added that the study would investigate both Mozambican demand and that of South Africa. It would also look at other countries in the region and potential export markets for the finished product.

The plant will use gas extracted from the Rovuma offshore gas field.

Sasol is looking at building a $16bn-$18bn GTL plant in the US capable of producing 96,000 barrels of fuel a day.

Estimates by Eni and America’s Anadarko Petroleum Corporation put the size of Rovuma at 100-trillion cubic feet of gas off the northern coast of the country.

The Mozambican government has drawn up a gas master plan to ensure it benefits from its resources. The option of liquefying the gas for sale to export markets is among the proposals being considered.

“GTL plants tend to be large-scale, although Sasol indicates smaller plants could be profitably operated in Mozambique,” said a 2012 draft executive summary of the master plan.

“GTLs production in Mozambique could displace imports and open up regional African markets for transportation fuel.”

Sasol CEO David Constable said the proposed plant would benefit the region. “The proposed GTL facility firmly aligns with Mozambique’s gas master plan goals, and, if successful, will go some way to accelerate socioeconomic development in the country and the broader region.”

Sasol is no stranger to Mozambique, having found gas in the Pande and Temane fields off the Inhambane province far south of the Rovuma fields in the early 2000s. These are supplying gas to South Africa via an 865km pipeline.

Pande and Temane have an estimated 3-trillion cubic feet of gas and are the only ones in production in the country.

Ichumile Gqada, from the South African Institute of International Affairs, said in a paper last August that the gas fields, which are of commercially exploitable size, could generate billions of dollars for Mozambique and make it Africa’s third-largest exporter of liquid natural gas.