South Africa’s energy group Sasol has started drilling the first of 12 new oil and gas wells in Mozambique. The government has just approved a production sharing agreement (PSA) under which part of the gas will be used for a 400 MW power plant to be developed near Sasol’s existing gas processing facility.
The gas-to-power project, hinges, however, on the timely development of power transmission capacity to transport the electricity to load centres in the rest of Mozambique.
Apart from the upstream, Sasol is planning to add a fifth gas train to its central processing facility, near Temane, as well as a train to produce liquid petroleum gas (LPG) for domestic production and liquid concentrate for sale to Asian markets.
Stepping up local use of gas
The central gas processing facility started operation in 2004, processing much of Sasol’s gas production from Pande and Temane which is then being exported to South Africa for power generation and chemicals production at the Sasolburg and Secunda complexes.
Merely 18% of the gas produced in Mozambique is used in the country itself, mostly to produce electricity in Ressano Garcia, a border town with South Africa. The share of local gas use is bound to increase as additional volume is earmarked for the new gas power project.
Another recently opened gas-fired power station in the southern border town of Ressano Garcia is Gigawatt Mozambique’s120 MW plant, built at a cost of just under $200 million. The new plant replaces around 100 MW worth of power supply that used to be imported from South Africa, produced by Eskom’s Arnot power station near Witbank.
Offshore gas reserves attract investment
Mozambique has seen a huge surge in investment in recent years following the discovery of larger than expected gas deposits offshore in the Rovuma field to the north of the country. Estimates of Mozambique’s oil and gas reserves have risen ten-fold over the last decade.
The International Energy Agency (IEA) estimates that the Rovuma Basin holds over 100 trillion cubic feet (Tcf) of technically recoverable natural gas reserves, potentially making Mozambique one of the world’s top LNG exporters.
The government’s ‘Gas Master Plan’ forecasts 10 liquefaction trains will be in operation by 2026, with an overall capacity of 69 billion cubic metres per year (Bcm/y) for which China and Japan have been keen to show their support. Japan's Prime Minister, Shinzo Abe has signed an agreement to lend Mozambique $672 million over the next five years in order to secure access to Mozambique's rich hydrocarbon reserves.