Country: South Africa

The reopening of some refineries in Africa and the gradual commissioning of new facilities will mark the recovery of the continent’s downstream industry in 2023, according to Hawilti’s African Refineries Watch published today. While sub-Saharan Africa’s refining capacity is still under-utilised at some 40%, recovery is on the horizon with the re-opening of South Africa’s Astron Energy Refinery (100,000 barrels per day – bpd) and Ghana’s Tema Oil Refinery (45,000 bpd). Once both facilities are back in operations, the sub-continent will be able to utlise about half of its installed refining capacity. Refining capacity to get a boost in West Africa Ghana is also expecting to commission soon the Sentuo Oil Refinery, a 3 train multi-product crude oil refinery built within the Tema Industrial Zone with a targeted production capacity of 120 000 bpd. Its initial phase will have a capacity to produce 2 million tonnes per year (tpy) of petroleum products, almost doubling the country’s refining capacity. This is welcome news for Ghana who has seen its imports bill soar in recent months, reaching almost $4 billion in 2022 in premium and gasoil imports, according to the Bank of Ghana. But much larger change is currently happening in Nigeria, with the upcoming commissioning of the 650,000 bpd Dangote Refinery. The facility is scheduled to be inaugurated on May 22nd just before President Buhari leaves office and will cement Nigeria’s position as Africa’s leading refiner. Hawilti expresses cautious optimism on the commissioning of the Dangote Refinery, pointing to the complex and lengthy process required to reach full production. In its most recent report on Nigeria, the IMF for instance did not expect the refinery to reach full capacity right away, assuming a production of only 100,000 bpd in 2024 and 200,000 bpd in 2025. Meanwhile, Nigerian modular refineries have managed to navigate the country’s challenging business environments and found ways to secure new feedstock options to run small-scale facilities. Both the 1,000 bpd Edo Refinery and the 2,500 bpd Duport Midstream Refinery for instance are currently receiving crude oil by trucks from a marginal field in the Niger Delta to support their operations. The Edo Refinery is also undergoing significant expansion, with owner AIPCC Energy expecting to reach a capacity of 30,000 bpd at the end of this year and up to 100,000 bpd in 2024. “The drive to develop downstream assets with emphasis on refineries in emerging economies coupled with global energy volatility and evacuation challenges in some African countries is fueling the interest in the development of modular refineries,” declared Souheil Abboud, Managing Director at VFuels LLC. “The benefits of decentralizing refining infrastructure are one of the main reasons for the growth of modular refineries in Africa, and especially Nigeria. We are surely witnessing a growing demand for more sustainable infrastructure assets and an interest from Nigerian developers to integrated low-carbon electrification options within their future refining infrastructure. VFuels is proud to have completed an engineering FEED package that integrates renewable power solution for a refinery project in Nigeria.”

South African subsidiary of leading renewable energy project developer JUWI has begun construction of the 84MW Wolf Wind project after reaching financial close, as an energy crisis pushes more demand for alternative sources of power in one of Africa’s biggest economies. The facility is projected to begin generating electricity for the South African grid by Q1 2024. “The Wolf Wind Project will be generating more than 360 GWh of clean electricity for the South African grid per year,” Red Rocket Chief Executive Officer, Matteo Brambilla, said in a statement. The renewable energy company won the bid for the project in Round 5 of the South African government’s Renewable Energy Independent Power Producers Procurement Programme (REI4P). The initiative aims to bring more megawatts into the country’s electricity system through private investments in renewable energy sources. “We’re proud to have partnered with JUWI on this project and pleased to have started construction on this and other large wind projects.” The Wolf Wind Project, located two hours from the city of Gqeberha, is the second wind project developed by JUWI under REI4P. The first — the 138 MW Garob Wind Project — began commercial operation in 2021. Tackling an energy crisis with renewable energy “JUWI is committed to developing projects that help South Africa address the energy crisis and achieve the clean energy transition, and so the progress in rolling out REI4P projects is very encouraging,” said Richard Doyle, Managing Director, JUWI South Africa. South Africa is facing an energy crisis caused partly by aging coal plants in need of constant maintenance. This has led to load-shedding implemented through a series of rolling blackouts, which has become part of the country’s power grid since 2007. Last year, the country experienced 3,773 hours of loadshedding according to the Council for Scientific and Industrial Research (CSIR) – or over 157 days. According to the Ministry of Mineral Resources and Energy, South Africa’s total domestic electricity generation capacity stands at 58,095 megawatts. But most of it—around 80%—comes from coal-fired power plants. President Ramaphosa wants South Africa to begin phasing out some coal-fired generation by 2050. Under its Integrated Resource Plan (IRP2019), the country wants to install over 25GW of renewable energy capacity and 3GW of energy storage by 2030 via its REI4P auctions. JUWI South Africa (JUWI Renewable Energies Pty. Ltd) says it is supporting a mix of clean energy projects, including over 1.5 GW of wind, 2 GW of solar and 5OO MW of hybrid projects for various clients. To support growing demand from private and public energy users, Richard Doyle says JUWI plans to develop a further combined 1 GW of wind, solar and hybrid projects in 2023.

Hawilti released an important new study on Gas for Africa in partnership with the International Gas Union (IGU), assessing the potential for domestic gas resources to energise Africa in line with the global energy transition. The African Energy Commission (AU-AFREC) and the Africa Finance Corporation endorse the report and its findings. The study starts by analysing current energy poverty trends in Africa, a continent with the lowest electricity per capita consumption in the world and the lowest CO2 per capita emissions. It argues for a pragmatic use of natural gas reserves to support a broad industrial and economic development of Africa in a way that is sustainable and enables a just energy transition. Mickael Vogel, Director & Head of Research, Hawilti “Energy poverty in Africa often boils down to the number of people without access to electricity – 600 million, or without access to clean cooking – 970 million. Unfortunately, this assessment misses the point and can lead to responses and solutions that are ill-adapted to Africa’s development needs. As it argues for a better use of gas, the report calls for more ambitious targets around energy access so that we can both bridge Africa’s energy deficit but also support economic growth and industrialisation.” The ”Gas for Africa” report highlights several ways in which gas can have a positive impact on Africa’s socio-economic development including by switching away from coal and diesel, developing energy-intensive industries and gas-based industrialisation, displacing fuelwood and biomass in households, generating baseload electricity to integrate intermittent energies, and building gas systems that can be decarbonisable in the future with hydrogen, renewable gas, and CCUS. However, a pragmatic utilisation of Africa’s 18 Tcm of proven gas reserves – or 9% of the world’s reserves – calls for a reorientation towards domestic monetisation. Most of the gas produced in sub-Saharan Africa remains exported, with local consumption still limited because of limited infrastructure availability. Additional barriers include limited access to capital, security risks, and policy uncertaint.y To overcome these key barriers to development, a total of eight guiding principles are given as recommendations to help stakeholders and policy makers navigate the complexity of the gas industry: The full report is available for download here.

South Africa’s PetroSA has issued a Request for Proposal (RFP) to secure a partner for the development, refurbishment, modification, upgrade, funding and/or operation of its gas-to-liquids (GTL) refinery at Mossel Bay. “PetroSA is planning to reinstate to full production level its Mossel Bay Production Assets which includes the FA Platform and GTL-Refinery (Gas Loop and Liquids Refinery) in the earliest possible time at least costs following suspension of production in 2020 due to feedstock challenges,” the company said in its RFP document consulted by Hawilti. While the 36,000 bpd refinery has not been able to produce since 2020, its outlook changed when TotalEnergies made significant gas and condensate discoveries at Brulpadda and Luiperd in 2019 and 2020, within its deep-water Block 11B/12B. Both discoveries have the potential to supply gas to the domestic market and provide the feedstock required to restart operations at PetroSA’s GTL refinery and reach full production capacity by 2027/2028. TotalEnergies and its partners are already working on an early production scheme (EPS) that would provide first gas and condensate production from the Luiperd discovery. The project would likely utilize PetroSA’s nearby infrastructure, including the FA Platform, in order to supply gas to customers in Mossel Bay. Interested parties for the development and upgrade of the Mossel Bay GTL Refinery have until February 20th to submit their applications for a turnkey solution from design to commissioning, including funding and feedstock security. PetroSA has notably expressed its interest to link the success of the projects to financial incentives, including sharing in production revenues, performance-based contracting, or equity participation.

Eco (Atlantic) Oil & Gas has announced that its shallow water Gazania-1 well within Block 2B offshore South Africa did not encounter commercial hydrocarbons. The well was the fourth one to be drilled this year in the Orange Basin following Graff-1 (Shell), Venus-1 (TotalEnergies) and La Rona-1 (Shell). Gazania-1 is the only disappointing one so far. Gazania-1 was considered to be a near-term low-risk well, and its prospect’s size had best estimate prospective resources of 300 million barrels. More importantly, the well had a 60% chance of success and targeted an updip section of the already discovered A-J reservoir, along with overlapping potential reservoirs. “Gases normally associated with light oil were encountered throughout the drilling of the Gazania-1 well. This, in our view, confirms the active hydrocarbon system, proven by the A-J1 discovery well in 1988, extends to the part of the basin where the Gazania-1 well is located. Further seismic interpretation will likely lead to the definition of viable areas for trapping downdip of Gazania-1 closer to the 1988 oil discovery A-J1,” Eco Atlantic COO Colin Kinley said in a statement. But this is just the beginning for drilling in the Orange Basin, which straddles both Namibia and South Africa. In Namibia, Shell is about to resume drilling on PEL 39 where it has already discovered oil & gas earlier this year at Graff and La Rona. The Deepsea Bollsta has been contracted for the campaign set to start by the end of 2022 and last for a year. Meanwhile, TotalEnergies is expected to start appraisal drilling soon around Venus in Namibia which could be the biggest African discovery ever made. In South Africa, the French is also planning several key exploratory wells in 2023 and 2024 on Block 5/6/7 and DWOB. Meanwhile, Eco Atlantic itself will be part of another exploratory drilling campaign next year on two wells within Block 3B/4B, operated by Africa Oil Corp and where the un-risked prospective resource is estimated at over 3bn barrels of oil and liquids and over 1.3 Tcf of gas.

Earlier this month, Starsight Energy and SolarAfrica have announced their merger to transform into one of the largest commercial and industrial (C&I) solar developers in Africa. The former has a regional footprint in East and West Africa, while the latter is mostly present in South Africa. The merger will notably result in the establishment of a pan-African renewable energy services provider, focused on rooftop to large-scale solar projects and backed by Helios Investment Partners (Helios) and African Infrastructure Investment Managers (AIIM). The merged entity will comprise a portfolio of over 220MW of operated and contracted generation capacity, and 40MWh of operational battery storage, with an additional generation pipeline exceeding 1GW. Substantial funding is expected to be allocated to South Africa, where new regulations have recently permitted wheeling and self-generation of up to 100 MW by private generators.

TotalEnergies has filed the Production Right Application for Block 11B/12B offshore South Africa, where it has made significant gas and condensate discoveries at Brulpadda (2019) and Luiperd (2020). Along with its partners Qatar Energy, CNR International and Main Street 1549 (Africa Energy Corp,), the French major has decided to relinquish the northern portion of the block while entering into a Gas Market Development Period to confirm the economic viability of the project. Development plans have so far focused on an early production system (EPS) targeting the Luiperd discovery to supply the domestic market in South Africa. Gas would be delivered to the Mossel Bay area, where South Africa already has key gas off-take infrastructure in place, including PetroSA’s gas-to-liquids (GTL) refinery and the 40 MW Gourikwa thermal power plant. Both plants represent 300 MMscfd of gas demand and were until now supplied by domestic fields that have now matured.

Actis and Mainstream Renewable Power have sold Lekela Power to the Infinity Group of Egypt and the Africa Finance Corporation (AFC). With an installed wind power capacity of 1 GW, Lekela Power is Africa’s largest pure-play renewable energy independent power producer (IPP). The platform was until now owned at 60% by Actis and 40% by Mainstream Renewable Power Africa Holdings. It currently owns five operational wind farms in South Africa (624 MW), one in Egypt (252 MW), and one in Senegal (159 MW). “This acquisition marks an important milestone in our journey to build a 3GW renewable energy platform. Working together with our partner, Infinity, we aim to more than double the capacity of our joint operating assets over the next 4 years, which stands at 1.4 GW after the Lekela acquisition,” said Samaila Zubairu, CEO of the AFC. Several projects are already in Lekela Power’s pipeline including the expansion of Senegal’s 159 MW Taiba Ndiaye Wind Farm by 100 MW and the addition of 175 MWh of battery storage. In Ghana, the platform is also planning the Ayitepa Wind Farm in two phases of 150 MW and 75 MW.

In yet another deal within the Orange Basin, Eco (Atlantic) Oil & Gas has announced its acquisition of another 6.25% in South African block 3B/4B. The company already entered the block earlier this year when it acquired Azinam, who holds a 20% non-operated interest in the license. Eco Oil & Gas is acquiring its additional 6.25% from the Lunn Family Trust, one of the largest shareholders of Ricocure (Pty) Ltd. Ricocure is a 60% interest holding in Block 3B/4B. The license is located in the deep waters of the Orange Basin in the Southern African Atlantic coast, south of the maritime border between Namibia and South Africa. The zone is notably located along-trend of an emerging Mid-Cretaceous oil play where Shell and TotalEnergies discovered oil and gas at their respective Graff-1 and Venus-1 high-impact exploratory wells in Namibia in early 2022. Both wells were play-openers for a new petroleum province offshore Namibia and South Africa, which could be further proven with exploration on Blocks 3B/4B. The license has been subject to substantive exploration spending, including from previous operator BHP Billiton who acquired a 10,000km² GeoStreamer 3D survey in 2012, while Shell acquired a further 8,000km² of 3D to the north of the block at the same time. In addition to 3D seismic data, 1,400 km of multi vintage 2D seismic also spans the licence. Such data has allowed current partners, including new operator Africa Oil Corp since 2020, to identify an inventory of leads and prospects out of which Wolf, previously known as Aardwolf, could be subject to exploratory drilling. Details on the exploration of Block 3B/4B are available in the “Projects” section within your Hawilti+ research terminal.

The United States’ International Development Finance Corporation (DFC) is evaluating an increase of its loan to Renergen’s Virginia Gas Project in South Africa by up to $500m. The development finance institution (DFI), previously known as Overseas Private Investment Corporation (OPIC), had already provided $40m in debt to finance Phase 1 of the project. Its growing appetite is welcomed news as most gas infrastructure developers in Africa have criticized the withdrawal of Western DFIs from financing oil and natural gas projects on the continent. South Africa’s first LNG and helium project The Virginia Gas Project is developed by Tetra4, a wholly owned subsidiary of ASX-listed Renergen. It is developing South Africa’s first and only onshore petroleum production right to produce liquefied natural gas (LNG) and helium, a first in the country. Its Phase 1 includes a scalable gas plant and 52km of pipeline, and a maximum production target of 74.6 million cubic feet per day (MMcf/d) (about 350kg) of liquid helium and 2,700 GJ (50 tons) of LNG. Upon start of production, Renergen will notably become South Africa’s first distributor of LNG at filling stations through its partnership with French major TotalEnergies. Phase 2 is expected to follow by 2024, further increasing LNG production to meet an anticipated increase in demand and provide LNG supplies across all major highways in South Africa. Key contracts for phase 2 were awarded in early 2021, including the FEED studies, and the final investment decision (FID) is expected to be taken once these are completed. Phase 2 is designed to allow Renergen to produce significantly larger quantities of LNG and liquid helium: it should notably require a CAPEX of $800m and involve a drilling campaign of 297 wells, anticipated to build up to 44 MMscfd at full production. 65% of Phase 2’s anticipated production is already pre-sold to clients including Linde, Meser, Helium 24 and iSi. Details on the Virginia Gas Project, including contractors, financiers, and offtakers, are available in the “Projects” section within your Hawilti+ research terminal.

Tronox Holdings, one of the world’s leading producers of high-quality titanium products, has signed a power purchase agreement (PPA) this week with South African IPP SOLA Group for 200 MW of solar power capacity. The project is expected to be commissioned by Q4 2023 and supply clean energy to Tronox’ mines and smelters in South Africa. “This 200 MW solar project is expected to provide approximately 40% of Tronox’s South African electricity needs and lower its worldwide scope 1 & 2 emissions by approximately 13%,” Tronox said in a statement. The company has set a target of aligning with a global warming scenario below 2° C and achieve net zero GHG emissions by 2050.

After weeks of speculation, Namibia’s national oil company NAMCOR has confirmed that Shell made a light oil discovery at the Graff-1 well on the PEL-39 license in the Orange Basin. The block is operated by Shell with a 45% interest along with QatarEnergy (45%) and NAMCOR (10%). The Graff-1 deep-water well was drilled to a total depth of 5,376 meters in water depths of approximately 2,000 meters, between December 2021 and February 2022. “The partners will conduct analysis on the well data and further exploration activity to determine the full size and recoverable resource potential,” QatarEnergy said, indicating that a second exploratory well might be on the table in the near future. “In the coming months, we will perform extensive laboratory analyses to gain a better understanding of the reservoir quality and potential flow rates achievable,” NAMCOR added in a statement. The discovery is encouraging news for TotalEnergies, who is drilling the Venus-1X well nearby, and for Eco Atlantic Oil & Gas who expects to spud the Gazania-1 well in the same basin this year but in South Africa. More on ongoing exploration activity in the Orange Basin can be found within Hawilti’s quarterly sector watch on Sub-Saharan African Exploration, available within the Hawilti+ research terminal.

TotalEren and Chariot have announced today the signing of a new Memorandum of Understanding (MoU) with South African platfinum group metals and chrome producer Tharisa Plc. The agreement paves the way to develop, finance, construct, own, operate and maintain a 40 MWp solar PV project at the Tharisa mine in South Africa’s North West Province. Following the execution of the MoU and before the project can be implemented, the parties will be negotiating a Power Purchase Agreement (PPA) for the supply of electricity on take-or-pay basis. Last November, Chariot had already signed binding key terms of a long-term joint-development partnership with Total Eren. By working together, both companies are working to jointly originate and develop wind and solar projects for mining clients in Africa. The partnership has an initial duration of three years and started on January 1st, 2022. It could then be extended for a further two years. Under the agreement, Chariot will have a right to invest between 15 to 49% into the co-development of projects. While TotalEren is a proven renewable energy independent power producer (IPP), Chariot acquired in 2021 the business of Africa Energy Management Platform (AEMP) for $2m to venture into the sector. AEMP was a renewable and hybrid energy project developer who already had a strategic partnership with Total Eren. Prior to AEMP’s acquisition by Chariot, both AEMP and TotalEren were already looking at a pipeline of 500 W of power to African mine operators.

The Africa Finance Corporation (AFC) has raised $400m in a new syndicated loan to support the development of infrastructure on the continent and aid in the post-pandemic recovery. Strong interest from investors led to the offering being 2.5 times oversubscribed, leading to a total facility of $100m above the initial target. This is the AFC’s first three-year facility since 2018. “The proceeds will facilitate upcoming infrastructure projects that address the continent’s developmental challenges,” the AFC said in a statement. Moody’s recently improved its outlook for AFC’s investment grade credit ratings to ‘stable.’ Its senior unsecured ratings at A3 and short-term issuer ratings at P-2 are the second highest of any institution in Africa. Key participating lenders as bookrunners and mandated lead arrangers include Absa Bank, Bank of China (London branch), First Abu Dhabi Bank PJSC, ICBC (London), Mashreq Bank PSC of Dubai, MUFG Bank of Japan, Nedbank (London branch), Rand Merchant Bank (a division of FirstRand Bank, London branch), Standard Chartered Bank and SMBC Bank International, acted as Bookrunners and Mandated Lead Arrangers. On their side, the Korea Development Bank and Standard Bank of South Africa acted as Mandated Lead Arrangers, while MUFG Bank Ltd and ICBC (London) also acted as Facility Agent and Documentation Agent, respectively. Last year, the AFC revealed plans to step up its infrastructure financing in Africa with a new asset management division, AFC Capital Partners. Its debut offering, the Infrastructure Climate Resilient Fund (ICRF) is planning to raise $500m this year and $2bn over the next three years.

The South Atlantic continental margins of Africa continue to fuel investors’ appetite as their promising prospects open up to oil & gas exploration. Eco (Atlantic) Oil & Gas, the Canadian independent with assets in Guyana and Namibia, has just announced its acquisition of 100% of Azinam to consolidate its portfolio in the region, including in Namibia and South Africa. The company announced this morning the signing of a Memorandum of Understanding (MoU) to acquire Azinam Group Ltd, in return for a 16.65% equity stake in the enlarged group n completion of the transaction. Under this new deal, Eco Atlantic is expected to close the acquisition of Azinam’s entire offshore asset portfolio in Namibia and South Africa by the end of January 2022. The agreement provides for a consideration in the form of new common shares to Azinam Holdings Limited who will own 16.65% of the enlarged Group. The licenses in which AziNam has working interests represent some of the most promising exploration assets in South Western Africa, with several drill-ready prospects that could yield future world-class discoveries. Gaining exposure to South African exploration opportunities These notably include a 50% operated interest in the Block 2B where the Gazania-1 exploratory well is expected to be spudded in the second half of this year. “Discussions are already underway with Eco’s key existing stakeholders in relation to underwriting the funds required to participate directly in the 2022 Block 2B South Africa drilling programme.” Eco (Atlantic) Oil & Gas, 10 January 2022 The drilling location for Gazania-1 will test both the Namaqualand (1,840m) and Gazania (2,040m) Prospects. Gazania is an up-dip of the proven A-J1 oil discovery and has Best Estimate Prospective Resources of 300mbarrels. Also in South Africa, Eco Atlantic will gain Azinam’s 20% working interest in the deep-water 3B/4B Block operated by Africa Oil Corp. (AOC). AOC is notably an equity investor into Eco Atlantic and owns 18.7% of the company’s shares. Recent data acquisition and interpretation from Block 3B/4B has allowed current partners to identify an inventory of leads and prospects out of which Wolf, previously known as Aardwolf, could be subject to exploratory drilling in the near future. Finally, Eco Atlantic will also enter the Nearshore Block 3B/4B where Azinam is operator with a 51% interest. Consolidating Namibia’s exploration portfolio In Namibia, Eco Atlantic is de facto consolidating its interest in licenses it already operates and is familiar with. Azinam is Eco Atlantic’s partner on petroleum exploration licenses (PEL) 97, 98 and 99 that were re-issued in 2020 with the establishment of a new 10-year life cycle (4 + 2 + 2) for each. During the first exploration period of four years, Eco Atlantic notably plans to shoot 3,000km of 2D seismic and 7,750 km2 of 3D seismic in different surveys across the blocks. Upon completion of the Azinam acquisition, Eco Atlantic will have increased its operated working interest in those blocks to 85%. It notably estimates that 2.362 billion barrels of oil equivalent of prospective P50 resources could be held within these four areas, which cover a total of over 28,500 km2. The acquisition announced today is one of many deals that have marked exploration activity in Namibia and South Africa in recent years. Several prospects are currently being drilled in the Orange Basin, including Venus-1 (TotalEnergies) and Graff-1 (Shell) in Namibia. “The deal is expected to complete by 31 January 2022 subject, inter alia, to the signing of a Share Purchase Agreement and satisfactory completion of due diligence by Eco and any requisite approvals.” Eco (Atlantic) Oil & Gas, 10 January 2022 More details on Eco (Atlantic) Oil & Gas and Azinam along with the exploration activity on PEL 97 and Blocks 2B and 3B/4B are available in the “Companies” and “Projects” section within your Hawilti+ research terminal.

Independents and international oil companies (IOCS) have finally spudded several much-awaited exploratory wells in Africa this quarter. They signal the resumption of exploratory drilling activity, in a continent that remains heavily under-explored. While Eni has led exploratory efforts this year so far with three discoveries in Angola (Cuica), Ghana (Eban) and Côte d’Ivoire (Baleine), additional operators have now taken the lead in hopes of closing 2021 with even more success. Bamboo-1X, FAR, The Gambia Drilling commenced in mid-November at Bambo-1 offshore The Gambia. Operator FAR Ltd is targeting three key prospects there: Soloo, Bambo and Soloo Deep. Resources are estimated at a maximum of 1.118 billion barrels and chances of success range between 7% to 37%. Drilling is executed by Stena Drillmax Ice. In case of a discovery, FAR has indicated that 90m barrels would be the set minimum economic field size. Its success case planning relies on a development of 150m barrels of oil via a 48,000 barrels of oil per day (bopd) floating, production, storage and offloading (FPSO) vessel. Three wells would then support production, gas and water injection operations. FAR is operator with a 50% working interest in the A2 and A5 permits with its joint venture partner, PC Gambia Ltd (50%), a subsidiary of Petroliam Nasional Berhad (PETRONAS). Jove Marine-1X, Petronas, Gabon Petronas spudded the Jove Marine-1X well in block F13 offshore Gabon in early November 2021. The Malaysian national oil company hopes to replicate its 2018 success with its nearby Boudji discovery. Drilling is executed by the Maersk Viking. Jove-1X is testing a four-way dip closure in the pre-salt Gamba and Dentale formations in the distal portion of the Lower Congo Basin. A discovery there would be welcomed news for Gabon after disappointing results from BW Energy’s exploration campaign earlier this year in the same area. Ondjaba-1X, TotalEnergies, Angola Activities at TotalEnergies’ Ondjaba prospect in Block 48 offshore Angola started back in October 2021. The well was drilled by the Maersk Voyager, which has since then moved to Namibia where it is currently drilling the Venus prospect. The Ondjaba-1 exploratory well was expected to reach 3,628m, setting a new world record. Block 48 is operated by TotalEnergies (40%) along with Angola’s national oil company SONANGOL (30%) and Qatar’s national oil company Qatar Petroleum (30%). Venus-1X, TotalEnergies, Namibia Venus-1X was spudded earlier this week offshore Namibia within Block 2913b, by the Maersk Voyager. The well will target an enormous middle Cretaceous basin floor fan at the toe of the Orange river delta, targeting a potential of 1 billion barrels of oil. Venus is one of two wells that, if proved successful, would significantly transform Namibia’s energy landscape and economy. Block 2913b is operated by Total E&P Namibia B.V. along with Qatar Petroleum (30%), Impact Oil and Gas (20%), and NAMCOR (10%). Graff-1X, Shell, Namibia November also marked commencement of exploratory drilling on PEL 39 offshore Namibia. The license is held by Shell and contains the Graff prospect. Like Venus, Graff is located within the Orange Basin and close to the South African maritime border. The Valaris DS-10 is mobilized for the campaign and is expected to then move to São Tomé-e-Principe to drill Jaca-1X on Block 6. PEL 39 is operated by Shell Namibia Upstream BV (45%) along with partners Qatar Petroleum (40%), and NAMCOR (10%). Sibiri-1X, Seplat Energy, Nigeria Last but not least, Seplat Energy is targeting the 78m barrels Sibiri prospect on OML 40 in Nigeria. The Sibiri exploratory well (previously known as Amobe) is one of the few exploration prospects being drilled in the country this year and is expected to help further increase the resource base on OML 40 where the wells on the Gbetiokun field are currently producing a peak of 12,000 barrels of oil per day (bopd). Preparatory activities for drilling of the high-impact prospect have been ongoing for a while. According to Seplat Energy, Sibiri carries a risked best estimate gross prospective oil resource of 78m barrels. The operator has already evaluated several options to accelerate the development of the discovery and achieve first oil in the event of exploration success. OML 40 is operated by the Nigerian Petroleum Development Company (NPDC, 55%) along with its partner Elcrest Exploration and Production Company Limited (Elcrest, 45%). Elcrest is itself a Joint Venture between Eland Oil and Gas (Nigeria) Limited (45%) and Starcrest Nigeria Energy Limited (55%). Seplat Energy acquired Eland Oil and Gas in 2019.

South African LNG distributor DNG Energy has announced the arrival of South Africa’s first ever consignment of liquefied natural gas on Tuesday this week. The shipment arrived from Rotterdam and is a first for South Africa who has until now imported gas by pipeline from Mozambique. DNG Energy expects to commission a floating storage unit delivery in Q1 2022 in South Africa to support the country’s growing gas monetization agenda. The 8,000-ton LNG barge is currently being build in Durban by South African Shipyards. The company is notably working on providing gas to the road and maritime sector, especially for trucks, buses, and ships. In September this year, it partnered with Masana Petroleum Solutions to increase gas adoption within South Africa’s transport sector.

South Africa’s state-owned Central Energy Fund (CEF) has issued a request for information (Rfi) for the development of an independently managed midstream LNG hub in Coega, within South Africa’s Eastern Cape Province. The project is developed under a joint-development agreement (JDA) signed between three South African state-owned entities: the CEF, Transnet SOC and the Coega Development Corporation. It was first announced during the 2019 Energy Budget vote speech and forms part of South Africa’s vision to integrate gas within its energy mix and support its transition away from coal. The RfI issued last Friday covers three distinct components: a gas aggregator that would consolidate gas demand through gas purchase agreements, an EPC contractor for the construction of fixed gas infrastructure from the Ngqura Port to the gas off-takers, and the provision of a floating, storage and regasification unit (FSRU). The CEF has requested all interested parties to submit their response by December 3rd and remains opened to receiving bundled replies integrating one or more components together. It is expected that the RfI would be followed by a procurement process. Where is the Gas Demand? Coega was selected as the initial hub to materialize South Africa’s gas ambitions because of the existence of off-take infrastructure and demand centers in its surroundings, including the Coega Special Economic Zone (SEZ). Potential off-takers notably include the 340 MW Dedisa PPP that currently operates at a 12% capacity factor but could be reviewed shall gas become available. It is also around Coega where Mulilo and TotalEnergies are developing a 200 MW mid-merit plant and where Karpowership is expected to deploy a 450 MW floating power plant to be fed with gas. An additional 1,000 MW power plant is confirmed there as part of South Africa’s Integrated Resources Plan (IRP), with procurement expected to start soon. Finally, existing and future industrial users are expected to represent a gas demand of 5 PJ per annum. Offshore bunkering operations at Coega required 1 million tonnes of heavy fuel oil pre-COVID and could switch to natural gas.

During the COP26 Climate Summit in Glasgow this week, the United States, Britain, France, Germany and the European Union have committed $8.5bn (£6.2bn) to help end South Africa’s reliance on coal. South Africa has become an undisputed renewable energy leader in Africa, but continues to heavily depend on burning coal to generate electricity. Coal still represents about 90% of the country’s energy mix, the highest share amongst G20 nations. Dubbed the “Just Energy Transition Partnership”, the initiative is expected to prevent up to 1.5 gigatonnes of emissions over the next 20 years. In a joint statement, the parties declared that the partnership would initially mobilise several financing mechanisms over a five-year period. These would include grants, concessional loans and investments and risk sharing instruments, including private sector funding. France has notably set its contribution at $1 bn. On its side, Germany mentioned a support for green hydrogen with a contribution of $700m from its development aid funds.

Renergen’s shares have been up +43.14% on the Australian Securities Exchange (ASX) and +31.27% on the Johannesburg Stock Exchange (JSE) since Friday. The most significant jump happened today with an increase of almost +30% on the ASX and +15% on the JSE after the company reported a 600% increase in its 1P helium reserves in South Africa. Source: Yahoo Finance Renergen is South Africa’s only onshore petroleum production right holder and sits over a Production Right area of 187,000 ha in the Free State around the towns of Welkom, Virginia and Theunissen. This is where its subsidiary Tetra4 is developing methane and helium reserves to produce liquefied natural gas (LNG) and helium, mostly for the domestic market at first. A 600% Jump in 1P Helium Reserves Following the recent successful drilling campaign and as part of Renergen’s ongoing assessment and development of Virginia, the company had commissioned international Reserves and Resources accreditation agency Sproule to estimate its reserves and resources of methane and helium within the Virginia Production Right area as at September 1, 2021. Sproule’s estimation resulted earlier today in an upgrade of both methane and helium reserves. 1P helium reserves have notably increased by an impressive 620% to 7.2Bcf while 1P methane reserves have increased by 427% to 215.1Bcf. As a result, 2P total gas, including methane plus helium, is now equivalent to 65 MMscfd for the remainder of the license tenor. Phase 1 is Almost Complete The development of Phase 1 at Virginia is already well underway and involves the connection of 12 existing gas wells to a new 52km gas pipeline and small-scale LNG and helium processing plant. Renergen secured all the necessary funding for this first phase and held a groundbreaking ceremony at the end of 2019. Drilling is now ongoing, along with pipeline construction and the development of the gas plant, with a commissioning expected before the end of 2021 and start of helium production in Q1 2022. Meanwhile, logistics and transport companies are expected to make a major part of future customers, and Renergen launched South Africa’s first LNG auction in July 2020 to allocate future LNG production. Strong interest for the auction confirmed the appetite of the South African market for cleaner and cheaper fuels. In August 2021, Renergen also executed its first LNG supply agreement not linked to the transport sector: the 5-year contract was inked with Consol Gloss for about 14 tons per day of LNG and will start in January 2022. It carries a price which will be linked to the floating LPG price in South Africa. Towards Phase 2 Phase 2 is expected to follow by 2024, further increasing LNG production to meet an anticipated increase in demand and provide LNG supplies across all major highways in South Africa. Key contracts for phase 2 were awarded in early 2021, including the FEED studies, and the final investment decision (FID) is expected to be taken once these are completed. Phase 2 is designed to allow Renergen to produce significantly larger quantities of LNG and liquid helium with a target of 44 MMscfd of gross gas sales made up of helium and methane. Phase 2 is expected to require a CAPEX of $800m and involve a drilling campaign of 297 wells, anticipated to build up to 44 MMscfd at full production. 65% of Phase 2’s anticipated production is already pre-sold to clients including Linde, Meser, Helium 24 and iSi. Details on the Virginia Gas Project are available in the “Projects” section within your Hawilti+ research terminal.

South Africa’s Minister of Mineral Resources and Energy (DMRE), Mr. Gwede Mantashe, has announced yesterday the preferred bidders for the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) Bid Window 5. The round resulted in the selection of five consortium as preferred bidders for 25 projects totalling 2,583 MW of renewable energy. The bidders will jointly invest R50 billion in those projects, expected to reach financial close early next year and to start generating by April 2024. Out of the 2.5GW of awarded capacity, 1,608 MW will be based on onshore wind and 975 MW on solar PV. Mainstream Renewable Power alone secured 12 projects totaling 1,274 MW (824 MW of onshore wind and 450 MW of solar PV). To date, the company has been awarded over 2.1 GW of renewable energy projects under the REIPPPP and has become the largest renewable energy developer of the country by capacity. The company currently owns 100% of the projects awarded but ownership will transfer to the equity consortium upon financial close including Mainstream (25%), Globeleq (26%), Africa Rainbow Energy & Power (23.25%), H1 Holdings (23.25%) and Community Trusts (2.5%). Other preferred bidders notably include Scatec with 273 MW, a Norwegian company that entered the South African energy market back in 2010 and already commissioned several solar PV projects under previous REIPPPP windows. Scatec had also secured three solar projects totaling 150 MW during the 2 GW Risk Mitigation IPP procurement programme (RMIPPPP) earlier this year. Scatec will own 51% of the equity in the projects while its local Black Economic Empowerment partner H1 Holdings will own 46.5% and a Community Trust holding will hold the remaining 2.5%. Scatec will also be the Engineering, Procurement and Construction (EPC) provider and provide Operation & Maintenance as well as Asset Management services to the power plants. EDF Renewables secured three projects, as did Engie and Red Rocket. Finally, the joint-venture of Mulilo and Total secured one project. Mulilo Total is already progressing two projects it has been awarded under the RMIPPPP last June, with a combined capacity of almost 275 MW. Window 5 resulted in some of the cheapest bid price on record, making South Africa’s wind and solar energy very competitive against coal. From 2012 to 2015, South Africa already awarded 6.3 GW of renewable energy capacity via windows 1, 2, 3, 3.5 and 4. Thousands of jobs were created, while attracting billions on foreign direct investment. While the projects from Window 4 are just reaching commissioning stage, South Africa just closed its Risk Mitigation IPP Procurement Programme (RMIPPPP), awarding another 2 GW of projects earlier this year. Following Window 5, Window 6 is expected to be launched this year to announce the winners in May 2022, while Window 7 would be launched in 2022 to that winners are awarded in Q3 of the same year. Finally, South Africa is also planning a storage and gas-specific windows, with the former launched in November this year while the latter would see its request for proposal issued in Q1 2022.

On Monday, natural gas and helium producer Renergen announced the completion of a helium forward sale agreement for 100,000 units over a period of 19 years. Each unit represents a thousand standard cubic feet (mcf) of helium at 99.999% purity and in liquid form and weights 4.7kg (37.5 litres when in liquid form). The units will be sold to Argonon Helium US Inc, a newly incorporated American helium trading company in Delaware. Argonon’s vision is to use these helium units to establish a spot market for helium. “Unlike other more transparent commodities, helium is not presently traded in the spot market and a visible price per mcf is not available. The collaboration between Renergen and Argonon is specifically designed to bring transparency of pricing into the helium market and highlight the growing global importance of helium,” Renergen said in a statement. The helium will be coming from Renergen’s Virginia Gas Project onshore South Africa. This is where Renergen’s subsidiary Tetra4 is developing the country’s first and only onshore petroleum production right to become the first liquefied natural gas (LNG) and helium producer in the country. The company already began producing small quantities of compressed natural gas (CNG) in 2016, which it supplies to the transport and logistics industry. The Virginia Gas Project is the next major phase of development, targeting the production of LNG and helium by the end 2021 by developing total proved (1P) methane reserves of 40.76 billion cubic feet (Bcf) and 1P helium reserves of 1.01 Bcf. Its Phase 1 consists in significant infrastructure expansion with a new scalable gas plant and pipeline, and a maximum production target of 74.6 million cubic feet per day (MMcfd) (about 350kg) of liquid helium and 2,700 GJ (50 tons) of LNG. Upon start of production, Renergen will become South Africa’s first distributor of LNG at filling stations through its partnership with French major TotalEnergies, and the country’s only domestic producer of helium. But the recent deal with Argonon further paves the way for the second phase of development at Virginia. With proved and probable (2P) reserves of methane estimated at 138.99Bcf and of helium estimated at 3.41 Bcf, the project has significant growth potential. As a result, Phase 2 is expected to follow by Q4 2023, further increasing LNG production to meet an anticipated increase in demand and provide LNG supplies across all major highways in South Africa. Key contracts for phase 2 were awarded in early 2021, including the FEED studies, and the final investment decision (FID) is expected to be taken once these are completed. Phase 2 is designed to allow Renergen to produce significantly larger quantities of LNG and liquid helium. Future helium’s production will be further supported by gas strikes in March 2021 at the POO7 and MDR1 wells: the former returned a helium concentration of 4.38% while the latter returned a helium concentration of 3.15%. Renergen’s recent deal with Argonon gives it potential pre-funded helium sales from Phase 2 of up to $25m and a portion of these funds would be used to accelerate Phase 2 of drilling without the need for an equity issue. Full details on the Virginia Gas Project are available in the “Projects” section within your Hawilti+ research terminal.

African Infrastructure Investment Managers (AIIM) has announced it has successfully completed a capital increase of ZAR 5.5 bn (about $370m) for its IDEAS Managed Fund (IDEAS) dedicated to infrastructure financing in the Southern African Development Community (SADC) region. “The new commitments were secured from 19 key South African institutional and pension fund investors, with two thirds of the capital being committed by new investors to the Fund,” AIIM said in a statement. The fundraise notably exceeded the company’s initial ZAR4.5bn ($301m) target by 20% and has taken the size of the open-ended fund to over ZAR 22 bn ($1.475bn). IDEAS has already been a critical investor in some of Southern Africa’s most famous sustainable infrastructure projects, and has allocated 75% of its capital so far to the renewable energy space. Such investments have notably seen the fund invest in several solar PV plants under South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Freshly raised capital will support the expansion of IDEAS’ portfolio in additional sustainable infrastructure assets, with additional investment likely to be made into South Africa’s new renewable energy projects currently at the procurement stage.

Globeleq has announced the completion of a ZAR 5.2 billion debt financing package for three of its renewable energy facilities in South Africa: the 138 MW Jeffreys Bay Wind Farm, and the 50 MW De Aar Solar and 50 MW Droogfontein Solar plants. The transaction falls under the Department of Mineral Resources and Energy’s (DMRE) Independent Power Producer Office (IPPO) Refinancing Protocol initiated in June 2020. The initiative works on a voluntary basis and targets IPPs from Bid Windows 1 to 3.5 of South Africa’s Renewable Energy Independent Power Procurement Programme (REIPPP). The initiative can include a wide range of options such as maintaining existing debt levels and structure but reducing margins; increasing existing debt levels; increasing debt tenor; converting Johannesburg Interbank Average Rate debt to Consumer Price Index debt; replacing reserve accounts with contingent facilities; replacing junior debt with senior debt introducing preference shares; and restructuring existing risk management strategy and hedging policies. Its end goal is to contribute to the lowering of the wholesale price of electricity. It had already resulting in South Africa’s largest infrastructure deal when the 50 MW Bokpoort CSP plant completed its refinancing in late 2020. The transaction had then created more favourable debt terms and effectively reduced the project’s cost of capital. Globeleq’s projects refinancing is the second transaction to be executed under the protocol. New financing structures effectively unlock reduced tariff to Eskom, which in turn directly impacts the cost of electricity for South African consumers. Globeleq’s refinancing operation, for which Absa acted as the mandated lead arranger and sole underwriter, will save ESKOM ZAR 1 billion in tariff reductions across the three assets over the remaining 12-year term of the power purchase agreements (PPAs). Details on REIPPP projects from Window 1 to 4 are available in the “Projects” section within your Hawilti+ research terminal.