SA raises stake in natural gas

21 July 2004

South Africa moved another step closer to diversifying its energy sources recently when Sasol opened an 865 kilometre natural gas pipeline from Mozambique. At the same time it seems likely that natural gas – rather than coal – will be the energy source for a new multi-billion rand power station.

The gas pipeline from Mozambique to the Mpumalanga plant of synthetic fuels producer Sasol, raises the country’s use of natural gas as a primary energy source from 1.5% to 4.3% of total demand.

The gas, to be imported from the Pande and Temane gas fields in Mozambique through the pipeline, will be used by Sasol to substitute some of the coal used at its two plants – at Sasolburg in the Free State and Secunda in Mpumalanga – to make chemicals and diesel and to supply industrial customers in Gauteng.

The pipeline immediately raises SA’s use of natural gas as a primary energy supply source from 1.5% to 4.3% of total demand, with the existing supply coming through a state-owned natural gas-to-fuel refinery in Mossel Bay.

At the same time, the department of minerals and enegy will later this year invite private companies to tender for the construction and operation of a new power station that is geared to supplement the power supply for electricity parastatal Eskom.

Although the government is still considering its options, it says it is “likely” that natural gas will be the plant’s primary energy source.

The R14-billion project to pipe natural gas from Mozambique to Sasol’s Secunda plant was officially launched in July 2002, and is expected to be completed at the end of 2004.

In 2001, state oil and gas company PetroSA completed a project to bring on stream the EM gas fields offshore of Mossel Bay, giving its Mossel Bay plant an additional eight years of gas life.

South Africa’s prospects for natural gas production were also boosted in 2000 with the discovery of offshore reserves close to the Namibian border. The reserve, named the Ibhubezi Prospect, contains proven reserves of 0.27 to 0.3 trillion cubic feet of hydrocarbons.

US-based companies Forest Oil Corporation and Anschutz, along with local empowerment firm Mvelaphanda, are exploring the Ibhubezi field. PetroSA bought a 30% share in the Ibhubezi project in 2003, with an eye to using Ibhubezi gas, along with gas from Namibia and Mozambique, at its Mossel Bay plant.

Exploratory drilling at Ibhubezi was due to be completed in late 2004, with the consortium hoping to begin production in 2006.

Sasol and PetroSA are the two major players in the synthetic fuel market. Sasol is the world’s largest manufacturer of oil from coal, gasifying the coal and then converting it into a range of liquid fuels and petrochemical feed stocks. PetroSA converts natural gas into a variety of liquid fuels like petrol, distillates, kerosene and petroleum gas.

Speaking at the switching-on ceremony in Secunda, Mpumalanga Premier Ndaweni Mahlangu said the project would benefit communities from the Pande and Temane gas fields in Mozambique, as well as those who live along the valleys and hills through which the pipeline runs.

It is envisaged that communities who live along the pipeline will benefit from the project through the development of infrastructure such as schools, creches and hospitals.

Mahlangu said the project would also benefit those who wanted to switch over to clean illumination and cooking, whether they were in Mpumalanga, Mozambique or Gauteng.

“We are committed to creating an enabling environment which not only encourages business to do what is their core function, but also offer opportunities for the small businessperson to crawl, walk, run through this corporate environment”, he said.

SouthAfrica.info reporter