Energy group Sasol has started drilling the first of what will be 12 new gas and oil wells in Mozambique where the government recently approved a production sharing agreement (PSA), as well as a field development plan for the resources, which are in the same neighbourhood as Sasol’s producing fields at Temane and Pande.

During a media tour of the first drilling site in Temane, Sasol Exploration and Production International senior VP John Sichinga said $1.4-billion had been approved for the campaign, as well as the further development of the central processing facility (CPF), near Temane, which began operating in 2004.

Besides the wells, the South African group would be adding a fifth gas train, as well as trains to produce liquid petroleum gas for domestic consumption and additional liquid concentrate, which is sold as a high-quality fuel blend and consumed mostly in Asia.

Sichinga says that in anticipation of the PSA, which was approved in January, Sasol made investments of about $50-million in site preparation at the CPF and the drill pads, as well as to secure long-lead items.

All drilling will take place onshore at Inhassoro and Temane, where the campaign started earlier this month, using an advanced rig manufactured in Houston, in the US. The giant rig will be moved from drill pad to drill pad in a campaign that is expected to continue until the first quarter of 2018.

The majority of Pande and Temane gas currently being processed at the CPF flows along the 865 km Rompco pipeline to South Africa, where Sasol uses it at its Sasolburg and Secunda complexes to produce electricity, fuel and chemicals.

The JSE-listed company also sells some gas to around 320 industrial customers with about 18% of the gas used in Mozambique itself, mostly to produce electricity at power stations in Ressano Garcia, on the border with South Africa. Gas sales from the existing petroleum production agreement area are governed by commercial contract that enables Sasol to sell into South Africa until 2029 and into Mozambique until 2034.

Sichinga says the PSA-linked investments are part of a phased growth plan aimed at raising the capacity of the CPF, as well as increasing the volume of gas available for consumption in Mozambique.

As part of the PSA approval, the Mozambican authorities have indicated that the additional gas should be used to fuel a 400 MW gas-to-power plant to be developed near to the CPF. The project hinges, however, on the development of transmission capacity to transport the electricity to load centres in the rest of the country.

Senior investor relations VP Cavin Hill says the development of the gas fields will take time and he expects work on the electricity developments to proceed in parallel.

He notes that Sasol has made ongoing investments into both the CPF and the pipeline and that, since the initial $1.2-billion investment, it has spent an additional $2-billion on exploration and expansions.

As a result, the capacity of the CPF has grown steadily from 172 GJ/y in 2004 to 183 GJ/y currently, with the de-bottlenecking programme currently under way to take it to 197 GJ/y in 2017.

The addition of a fifth will raise the plant's capacity well above 200 GJ/y. The capacity of the pipeline has also been increased though the introduction of additional compressor stations and two loop-lines.

“South African needs to diversify its energy mix to include more gas,” Hill asserts, adding that there are still significant opportunities to "monetise" Mozambique’s gas resources while helping South Africa with it energy diversification aspirations.