SacOil Updates on Mozambique-South Africa Gas Pipeline

Johannesburg based SocOil on Tuesday said that a cooperation agreement has been signed that will result in the construction of the $6 billion gas pipeline from Mozambique to South Africa.

In 2014, SocOil had signed a joint development agreement (JDA) with the Public Investment Corporation SOC Limited (PIC) and the Instituto de Gestão das Participações do Estado (IGEPE) to evaluate technical and commercial feasibility of the gas pipeline project. The latest cooperation agreement supersedes the JDA. SocOil has also formed a new joint venture that will now implement the project.

The cooperation agreement has been signed between Empresa Nacional de Hidrocarbonetos E.P (ENH), the national oil and gas company of Mozambique, Profin Consulting Sociedade Anónima, a Mozambican private sector consortium, SacOil Holdings Limited and the China Petroleum Pipeline Bureau (CPP).

The 2,600 km pipeline will carry gas from Mozambique’s Rovuma Basin to Gauteng in South Africa.

The cooperative agreement assures the financing commitments required for the pre-investment and engineering studies and the speedy and effective construction and implementation of the project, SocOil said.

The new 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 and will also be the lead arranger and shall be responsible for procuring the debt financing equal to 70 percent of the total project cost from Chinese financial institutions.

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, SocOil stated.