The South African independent company SacOil Holdings Limited says an agreement has been signed in Johannesburg which paves the way for the construction of a 2,600-kilometre gas pipeline from the gas-rich Rovuma Basin in northern Mozambique to Gauteng Province, South Africa’s smallest but most populous province.

To be known as the African Renaissance Gas Pipeline, it will also deliver gas to Mozambican towns along the pipeline’s route.

The agreement was signed by Mozambique’s National Hydrocarbon Company (ENH), SacOil, Profin Consulting, and the China Petroleum Pipeline Bureau (CPP).

Profin is a Mozambican private sector consortium, while CPP, according to a SacOil media statement, is “a leading Chinese and international pipeline construction company that will bring a wealth of technical expertise to the pipeline project”.

According to SacOil’s chief executive officer, Thabo Kgogo, the agreement confirmsedthe financing commitments required for the pre-investment and engineering studies phases of the project, and paved the way for its speedy and effective construction and implementation.

CPP will finance and carry out the pre investment studies. It will also secure 70 per cent of the project’s budget from Chinese financial institutions. Other investors will be from Mozambique and South Africa.

It is estimated that constructing the pipeline will cost six billion US dollars.

CPP is affiliated to the China National Petroleum Company (CNPC) which holds a 20 per cent stake in Offshore Area Four, situated in the Rovuma Basin off the coast of Cabo Delgado province.

The Italian company ENI is the operator of Area Four, which holds an estimated 85 trillion cubic feet of natural gas.

The signing of the co-operation agreement, said SacOil, was in line with SacOil’s strategy to become a leading pan-African oil and gas company engaged in upstream, midstream and downstream activities.

Source: AIM