TIDMSAC
RNS Number : 5327Q
SacOil Holdings Limited
01 March 2016
Aim Share Code: SAC 1 March 2016
SacOil Holdings Limited
("SacOil" or "the Company")
COOPERATION AGREEMENT CONCLUDED WITH NEW PARTNERS AND THE CHINA
PETROLEUM PIPELINE BUREAU FOR THE CONSTRUCTION OF THE AFRICAN
RENAISSANCE GAS PIPELINE IN MOZAMBIQUE
1. Key Highlights
-- A Cooperation Agreement ("CA") that will result in the
construction of the estimated US$6 billion 2 600km, large-diametre
pipeline to transport natural gas from Mozambique's Rovuma Basin to
Gauteng in South Africa, has been signed between Empresa Nacional
de Hidrocarbonetos E.P ("ENH"), the national oil and gas company of
Mozambique, Profin Consulting Sociedade Anónima ("Profin"), a
Mozambican private sector consortium, SacOil Holdings Limited
("SacOil") and the China Petroleum Pipeline Bureau ("CPP"), a
leading Chinese and international pipeline construction company
that will bring a wealth of technical expertise to the pipeline
project.
-- The CA assures the financing commitments required for the
pre-investment and engineering studies and the speedy and effective
construction and implementation of the project.
-- The signing of the CA is a major milestone and is in line
with SacOil's strategy to become a leading Pan African oil and gas
company engaged in Upstream, Midstream and Downstream
activities.
2. Introduction
On 8 December 2014, SacOil announced that it had entered into a
Joint Development Agreement ("JDA") with the Public Investment
Corporation SOC Limited ("PIC") and The Instituto de Gestão das
Participações do Estado ("IGEPE"). The JDA set out the terms for an
evaluation of the technical and commercial feasibility of the
construction of a gas pipeline and distribution facility intended
to carry natural gas from Mozambique's Rovuma fields to South
Africa, with off-takes to other neighbouring Southern African
Development Community ("SADC") countries ("the Project").
3. The Partners
In line with the JDA announcement of 8(th) December 2014 and as
part of the project promotion process to assure enhanced Mozambican
leadership, participation and coordination of the Project
implementation, leading up to the formation of a Joint Venture
Company, as well as to assure funding for the implementation of the
Project, SacOil is pleased to announce that ENH, Profin and CPP
have become new partners to move the project forward to
implementation. Further details on ENH, Profin and CPP are provided
below.
ENH, the main statutory agency responsible for the development
of Mozambique's hydrocarbon industry, replaces IGEPE. Profin's
participation assures a leading role for the Mozambican private
sector on the Project. As EPC Contractor, CPP brings a wealth of
world class construction, debt and equity financing expertise to
the Project. In accordance with its investment mandate, the PIC
will not be active in the pre-investment phase but remains
committed to the development of the Project. The PIC will retain
its position as member of the South African consortium that is
being formed and intends to become a party to the Joint Venture
agreement when it is concluded. The pre-investment consortium
therefore consists of ENH, Profin, SacOil and CPP (collectively
"the CA Partners"). The CA Partners will focus on ensuring that the
Project achieves bankability by assuring a solid investor group
drawn from China, Mozambique and South Africa.
4. Cooperation Agreement
The CA supersedes the JDA and leads to the incorporation and
operation of the Joint Venture Project Development Company, which
will have Chinese, Mozambican and South African consortiums of
investors as shareholders. The South African Consortium will
include SacOil and the PIC. The JV Company will develop and manage
all the initial activities of the Project including requisite
pre-investment studies, which will be performed by CPP. CPP will
pre-finance the studies up to bankable feasibility. CPP will also
be the Lead Arranger and shall be responsible for procuring the
debt financing equal to 70% of the total project cost from Chinese
financial institutions.
5. Rationale for the Project
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 therefore justify such a pipeline.
The estimated US$6 billion Project is being 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. These are challenges experienced by South
Africa and other economies in the region. The CA Partners,
including the PIC, believe 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 a significant
number of jobs and improve living standards for the people of the
region.
6. Commentary
Commenting on today's announcement, SacOil's CEO Dr Thabo Kgogo
said,
"The Mozambique gas project is central to the growth strategy of
SacOil to become a leading Pan African oil and gas company. The
inclusion of ENH and Profin strengthens our partnership with local
Mozambican companies in the area of Oil & Gas and the Energy
sectors. Additionally, the Cooperation Agreement with ENH, Profin
and CPP is also in line with our strategy of developing strong
strategic partnerships. We look forward to working with our
partners to solve the energy demands of the SADC region."
Further updates in this regard will be provided to SacOil
shareholders as and when new developments occur.
JSE Sponsor
PSG Capital Proprietary Limited
1 March 2016
For further information please contact:
SacOil Holdings Limited
Damain Matroos +27 (0) 10 591 2260
finnCap Limited (Nominated
adviser and broker)
Christopher Raggett / James
Thompson +44 (0)20 7220 0500
FirstEnergy Capital (Joint
broker)
Hugh Sanderson / David van
Erp +44 (0)20 7448 0200
Buchanan (Financial PR adviser)
Ben Romney / Helen Chan /
Madeleine Seacombe +44 (0)20 7466 5000
About SacOil
SacOil is a South African based independent African oil and gas
company, dual-listed on the JSE and AIM. The Company has a diverse
portfolio of assets spanning production in Egypt, exploration and
appraisal in the Democratic Republic of Congo, Malawi and Botswana,
and midstream and downstream operations including a gas pipeline
project in Mozambique and an oil terminal project in Equatorial
Guinea. The Company continues to evaluate industry opportunities
throughout Africa as it seeks to establish itself as a leading,
full-cycle pan-African oil and gas company.
About ENH
ENH is a public entity established by Decree in 1981, as the
commercial arm of the Government of Mozambique and with the mandate
to participate in the commercialization, sustainable exploration,
development, production, processing, transportation, distribution
of the nation's hydrocarbon resources. ENH has a 15% share in Area
1 gas field while 85% is held by Anadarko. In Area 4 gas field, ENH
holds 10% stake, while Eni is the operator.
About Profin
Profin Consulting Sociedade Anonima is a special purpose legal
entity for investments into natural gas transportation, related
distribution and power production projects in Northern Mozambique,
and incorporated and operating under the laws of the Republic of
Mozambique. Profin signed a Memorandum of Understanding with
Empresa Nacional de Hidrocarbonetos (ENH) in October 2015 "with
regards to participating as a joint venture partner in the
integrated natural gas projects, subject to technical feasibility
and commercial viability".
About China Petroleum Pipeline Bureau
China Petroleum Pipeline Bureau, founded in 1973, is a
professional company of China National Petroleum Company ("CNPC")
specializing in research, engineering, construction and technology
services and construction. Over the past 40 years, 80, 000 km of
onshore pipeline projects, more than 10,00km of offshore pipelines,
30 million m(3) of gas storage projects and installation of more
than 100 oil and gas processing facilities has been constructed by
CPP. Footprints spread in more than 30 countries, like Middle East,
Africa, Central Asia, Southeast Asia and America. In Africa, CPP is
active in Mozambique, Tanzania, Kenya, Chad, Niger, Sudan and
Libya.
About PIC
The Public Investment Corporation (PIC) is a public asset
management firm wholly-owned by the South African government, with
the Minister of Finance as the sole shareholder representative of
the government. PIC's clients are mostly public sector entities
including the Government Employees Pension Fund, which contributes
90% of the funds that PIC manages. Other clients include
Unemployment Insurance Fund, Associated Institutions Pension Fund,
Compensation Commissioner Pension Fund and Compensation
Commissioner Fund.
About IGEPE
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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