The acquisition will see South Africa’s iGas and Mozambique’s CMG hold 40% equity shares in the pipeline.
As South Africa enters stage six load shedding, integrated energy and chemical company, Sasol, has announced that South African gas development company, iGas and Mozambique’s Companhia Mocambiçana de Gasoduto (CMG) have exercised their pre-emptive rights to acquire a combined 30% equity interest in the Republic of Mozambique Pipeline Company (ROMPCO) pipeline. With Sasol selling its interest in May 2021, in line with the company’s divestment strategy, the acquisition marks a new era of regional cooperation on the back of intra-African gas trade.
Sold for an initial R4.1 billion with an additional deferred payment of R1 billion – pending specific milestones are achieved by June 30, 2024 –, the shares bring iGas and CMG’s total equity shares to 40% each, up from 25%, with Sasol subsidiary, SSA holding the remaining 20%. Sasol will remain the operator of the pipeline with supply to South Africa remaining unimpeded. Linking gas-rich Mozambique with Sasol’s Secunda operations in South Africa, the 865km pipeline has been instrumental towards supplying South Africa’s economy with energy, and the acquisition is expected to herald a new era of trade between the southern African nations.
The acquisition comes at a critical time, both for South Africa and Mozambique. This week, South Africa introduced stage six load shedding, citing coal plant disruptions and maintenance delays, plunging the country into six hours of darkness per day as the energy crisis worsens. Accelerating the diversification of its energy mix, natural gas is expected to play an increasingly important role in the country, with the pipeline itself serving as a key asset to improving energy security. South Africa has placed natural gas as a priority in 2022 and beyond, recognizing the role this clean energy resource will have, spurring industrialization and meeting both domestic and regional demand. With the acquisition, gas supply will not only be maintained but possibly increased as Mozambique increases its capacity and South African demand grows.
Meanwhile, for Mozambique, as large-scale gas projects begin to come online including the Coral-Sul floating liquefied natural gas (LNG) facility – which received first gas in June 2022 –, a new era of gas market growth is in sight. With over 100 trillion cubic feet (tcf) of gas, Mozambique continues to make significant progress towards becoming a competitive gas exporter. ROMPCO, which has been exporting gas from Mozambique’s Pande and Temane fields since 2004, has not only paved the way for cross-border gas trade but has emphasized the role intra-African trade will have for strengthening energy security across the continent. Going forward, as other sizeable projects including the TotalEnergies-led 12.8 million tons per annum Mozambique LNG project, the country is set to witness unprecedented socioeconomic growth on the back of revenue generated from gas.
A strong advocate for increasing intra-African gas trade, the African Energy Chamber (AEC) commends both Mozambique and South Africa for the acquisition, recognizing the significance this momentous deal will have for generating revenue in Mozambique through the export of gas while ensuring a consistent supply to South Africa as the country’s energy crisis becomes imminent.
“Africa needs gas, and the Chamber will continue to drive this narrative. In 2022, the energy crisis has only become clearer. Countries including South Africa are at risk of delayed socioeconomic growth due to inconsistent power supply, supply which can be improved through gas. With projects in Mozambique coming online and new supply brought on the market, increasing intra-African gas trade will be key for unlocking a new era of industrialization, energy access and socioeconomic growth. During the continent’s premier energy event, African Energy Week (AEW) 2022, we will discuss gas, intra-African gas trade and diversification, providing the best platform for deals such as the ROMPCO acquisition to be signed,” states NJ Ayuk, Executive Chairman of the AEC.
During AEW 2022 – which takes place from October 18-21, 2022, in Cape Town – discussions will center around the role that improving intra-African gas trade will have in Africa. With over 620 tcf of reserves across the continent, gas presents an ideal solution to making energy poverty history by 2030.
AEW 2022 is the AEC’s annual conference, exhibition and networking event. AEW 2022 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments. Key organizations such as the African Petroleum Producers Organization, as well as African heavyweights including Equatorial Guinea and Nigeria, have partnered with AEW, strengthening the role the event will play in Africa’s energy future.