The US is contemplating increasing debt provided to South Africa’s leading gas, LNG, and helium project

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.

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