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Stimulating regional co-operation

About the natural gas project in Mozambique

The existence of the Pande and Temane gas fields was established decades ago. However, these assets were effectively stranded due to lack of markets and infrastructure, as well as prevailing political conditions, until Sasol proposed the US$1.2 billion natural gas project.
This involves cleaning and processing natural gas from the Pande and Temane fields in a 120 MGJ/a central processing facility (CPF) in Temane and transmitting it via an 865 kilometre pipeline (capacity: 120 to 240 MGJ/a) to join Sasol's gas distribution network which starts at Secunda in South Africa.

The natural gas project contributed to the creation of a favourable investment climate by initiating regulatory co-operation between Mozambique and South Africa. To facilitate the project, the two governments negotiated a general Bi-lateral Agreement on Natural Gas Trade. The overall objective of this treaty was to promote and facilitate gas trade between the two countries, and to establish an umbrella agreement for specific gas trade projects. It set up a Gas Commission to oversee all cross-border gas trade and act as the forum of communication between the two countries. Key elements included:

  • Harmonisation of regulatory requirements;
  • Taxes and customs duties; and
  • Safety and environmental protection.

This in turn led to the creation of a favourable, safe investment climate and the establishment of an exploration and production sector in Mozambique.

Despite significant gas discoveries in the Rovuma basin offshore northern Mozambique, Sasol is still the only operator currently monetising gas in the region. Our cumulative direct contribution to the Mozambique government over the first 10 years was more than US$616 million, with our commitment over this period amounting to US$3 billion.

A decade of mutual benefits

Working with the governments of South Africa and Mozambique and our partners, we established a viable gas industry that over the last decade, has played an increasingly important role in the regional energy mix. The CPF was expanded in 2011 to increase capacity to 183 MGJ/a of natural gas. Gas from the CPF:

  • Is being used as the feedstock for the first permanent gas-to-power plants in South Africa (Sasolburg) and Mozambique (Ressano Garcia), thereby enhancing energy security helping to reduce greenhouse gas emissions in both countries – the use of gas-based electricity reduces carbon emissions by approximately 40% when compared with coal-fired electricity
  • Led to the opening of South African natural gas markets in the domestic and industrial sectors
  • Has increasingly been used in Mozambique. The government of Mozambique had the option to take royalty gas in cash or in-kind.
  • The growth in the amount taken in-kind indicates the steady development of the domestic market. With the commissioning of the expanded CPF in 2012, the amount of royalty gas was increased to 9%. In addition to royalty gas, 25MGJ/a of expanded capacity is being utilised in-country.

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