Communication - Presse

Sasol’s Mozambique Gasworks Up and Running

Sasol announced this Tuesday, 25 July, that it has commissioned its gas facilities in Mozambique under its Production Sharing Agreement (PSA).

In a statement, quoted by the Energy Voice news portal, the company said work on the facility had proceeded within cost and schedule targets despite Tropical Storm Freddy. To start official operations, Sasol needs approval from Mozambique’s regulatory body, in this case the INP.

The South African petrochemical company assured that its drilling was successful, increasing its inventory of wells from 19 to 24. The company also reported a gas discovery at PT5-C in southern Mozambique, which provides closer integration of its current facilities.

Production in Mozambique is at the upper end of Sasol’s guidance of 111bn to 114bn cubic feet. Production for 2023 was up 2% on last year, driven by additional wells, however, gas sales to South Africa were down 3% on the previous year as a result of lower customer demand.

Mozambique approved Sasol’s field development plan in September 2020. The board of directors took the final investment decision (FID), valuing the project at $760m, in February 2021.

The company said the project will provide gas sales to the Temane Thermal Power Station (CTT) and Sasol in South Africa. The last quarter marked the end of Sasol’s financial year. The company warned of uncertainty ahead in the global and petrochemical markets for 2024 as Eskom and Transnet face challenges in South Africa, in addition to concerns over lorry safety, meanwhile Sasol warned of continued price and demand volatility ahead.

Last week, Sasol submitted gas price applications to the National Energy Regulator of South Africa (NERSA). In its application, the company said it had invested more than $300 million in Mozambique’s gas supply to maintain supply until 2026, and argued that prices need to increase dramatically. In the 2022 financial year, it charged 68.39 rand ($3.88) per gigajoule. The company requested a price of 120 rand ($6.82) from July 2023, with NERSA responding that the figure was excessive.

“The regulator must take into account the risks Sasol faces and the incentives to develop new resources. If the price is not attractive enough to sell to third parties, the company could convert the gas into other products at its own facilities,” the South African petrochemical company argued.

This month, the Competition Commission also took umbrage at Sasol’s pricing plans, stating that “Sasol had been charging too high prices for almost ten years and the case was referred to the Competition Tribunal”.

Link: https://360mozambique.com/oil-gas/sasols-gas-facilities-in-mozambique-are-now-operational/