SacOil Holdings Limited Joint Development Agreement for Gas Pipeline (1157Z)
December 08 2014 - 8:00AM
UK Regulatory
TIDMSAC
RNS Number : 1157Z
SacOil Holdings Limited
08 December 2014
SACOIL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE Share Code: SCL AIM Share Code: SAC
ISIN: ZAE000127460
("SacOil" or "the Company")
SACOIL, THE PIC AND IGEPE SIGN A JOINT DEVELOPMENT AGREEMENT TO
EVALUATE THE VIABILITY OF THE CONSTRUCTION OF A TRANSNATIONAL
TERRESTRIAL GAS PIPELINE
1. Introduction
Further to the announcement dated 31 March 2014, SacOil, the
Public Investment Corporation SOC Limited ("PIC") and The Instituto
de Gestão das Participações do Estado ("IGEPE") (collectively "the
JDA Partners") have signed a Joint Development Agreement ("JDA")
dated 03 December 2014 to evaluate the technical and commercial
feasibility of a transnational terrestrial gas pipeline and
distribution facility that will carry natural gas from Mozambique's
Rovuma fields into South Africa, with off-takes to other
neighbouring Southern African Development Community ("SADC")
countries ("the Project").
2. Salient features of the JDA
Under the JDA, whose effective date is 03 December 2014, the JDA
Partners will work together to evaluate the viability of the
Project. The feasibility studies will cover engineering, market
development, gas purchasing, economic, financial, technical and
commercial risk profiles as well as environmental, social and
regulatory issues.
The JDA partners are currently setting up a technical working
group ("TWG") to commence pre-feasibility studies. A project
company will be incorporated to ensure that total focus on the
Project is maintained and emphasis will be placed on local
ownership of businesses along the entire value chain.
3. Rationale for the Project
The Southern African energy market has been constrained by
shortages for many years. Natural gas accounts for a very small
portion of the energy demand in South Africa (3% versus 21%
globally). The South African Government has stated its objective to
reduce CO(2) emission levels and to increase the use of natural gas
(PwC 2012, The Gas Equation Report). The demand for natural gas is
also expected to grow in Botswana, Malawi, Mozambique, Zambia,
Zimbabwe and Africa in general. The main driver of this demand for
gas is expected to be from gas-fired power stations, vehicle and
related downstream industries and domestic consumption
(International Energy Agency, World Energy Outlook report
2011).
The gas market in South Africa, which is the industrial
powerhouse of Africa, is driven by demand from the Saldanha
Industrial Development Zone, the Mossel Bay gas-to-liquid plant,
the Mossel Bay and Atlantis diesel-fired power stations, an array
of ageing coal-fired power stations, which could be converted to
gas, as well as possible new power stations in Coega and Richards
Bay.
If constructed, it is proposed that the 2,600km main pipeline
from northern Mozambique to South Africa will, en route, deliver
gas to key towns and settlements in all provinces of Mozambique,
thereby stimulating industrial growth in the country. The
indicative gas requirements of, as well as benefits to, Mozambique
and South Africa appear to justify such a pipeline.
The estimated $US6 (six) billion Project is proposed to be
designed to make energy affordable to a greater proportion of the
population, promote clean energy, reduce oil import bills, lower
carbon footprint and carbon tax, all of which are challenges
experienced by the economies of southern Africa. It is the JDA
Partners expectation that the Project will be transformational to
Africa's energy infrastructure landscape, as well as supportive of
economic growth across the region. The Project will also seek to
increase the international competitiveness of southern African
economies, create many jobs and improve living standards for the
people of the region.
4. Commentary
SacOil's CEO Dr Thabo Kgogo said, "The Mozambique gas project is
key for the economic transformation of Southern Africa. Our
participation is in line with SacOil's long term strategy of being
a leading Pan African oil and gas company."
Further updates in this regard will be provided to SacOil
shareholders as and when new developments occur.
IGEPE is an agency of the Government of Mozambique established
by law to manage investment portfolios and shares of the Republic
of Mozambique in commercial ventures, in particular, the promotion
and management of the state's equity participation in strategic
projects. SacOil is an independent African Oil and Gas company with
dual listing on the Main Board of Johannesburg Stock Exchange and
the AIM Board of the London Stock Exchange. The PIC is an
investment management company and the largest fund manager on the
African continent, established by an Act of Parliament and wholly
owned by the Government of the Republic of South Africa.
Johannesburg
8 December 2014
JSE Sponsor
PSG Capital
For further information please contact:
SacOil Holdings Limited
Tariro Mudzimuirema +27 (0)11 575 7232
finnCap Limited (Nominated Adviser and
Broker) +44 (0) 20 7220
Matthew Robinson / Christopher Raggett 0500
FirstEnergy Capital (Financial Adviser
and Joint Broker UK) +44 (0) 20 7448
Majid Shafiq / Travis Inlow 0200
Instinctif Partners London (UK Investor
Relations)
David Simonson / Anca Spiridon +44 (0)20 7457 2020
Instinctif Partners Johannesburg (SA
Investor Relations)
Nicholas Williams / Fred Cornet +27 (0)11 447 3030
This information is provided by RNS
The company news service from the London Stock Exchange
END
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