SacOil plans to build a 600km pipeline link to Mozambique

SacOil plans to build a 600km pipeline link to Mozambique

SACOIL wants to diversify its assets by building a natural gas pipeline in Mozambique and developing Egyptian oil wells, according to chief executive Thabo Kgogo.

“We are in discussions with a couple of international engineering companies that would like to participate” in a project to build a gas-processing plant in Mozambique and a line that would bring the fuel 600km to South Africa, Kgogo yesterday.

The company hopes to start feasibility studies in the first quarter of next year.

The company this year started a programme to broaden assets outside of exploration blocks it holds in Malawi, Botswana and the Democratic Republic of Congo. SacOil acquired the Lagia oil field on Egypt’s Sinai peninsula.

Along with South Africa’s Public Investment Corporation and Mozambique’s Instituto De Gestão Das Participações Do Estado, the company also entered into a memorandum of understanding over the gas pipeline and plant.

The waters off Mozambique are the site of the world’s largest natural gas discovery in a decade. SacOil may first finish the processing plant to service the domestic market as the pipeline is under construction, according to Kgogo.

“We used to have a lot of exploration opportunities or blocks, so we are rebalancing that portfolio by acquiring development-to-production assets,” Kgogo said. “Then you can generate cash to fund your exploration.”

SacOil bought the Egypt assets on September 9 from Mena International Petroleum in a deal including $10 million (R220m) in shares and settling as much as $4.1m of liabilities.

The company could start hydraulic fracturing on current wells this year and drilling additional wells in early 2015 “with the intention of ramping up production to about 1 000 barrels a day” of oil, said Kgogo, who expected the oil price to stabilise at $90 a barrel.

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