Sasol's decision to reverse plans to use a proposed pipeline that would stretch from fields in northern Mozambique to its South African operations isn’t seen impacting the project’s prospects.
The fuel producer, South Africa’s second-biggest listed company by sales, said in 2020 it would potentially buy a small stake in the proposed 2 600 km pipeline connecting to natural gas projects part-owned by TotalEnergies and ExxonMobil Corp. That’s about the distance from Boston to Houston.
Sasol has since ruled out the idea, saying it doesn’t want to get stuck with the infrastructure as the world shifts away from fossil fuels.
African Renaissance Pipeline Limitada, the Mozambican company planning the project valued at about $8-billion, has enough interest from other buyers, said Kwasi Agbley, an adviser to ARP’s board.
“We didn’t predicate our project on Sasol,” Agbley said by phone. “We already have expressions of interest of potential domestic users for nearly 60% of the pipeline’s capacity.”
CHINESE HELP
ARP, which counts Mozambique’s state oil and gas company Empresa Nacional de Hidrocarbonetos and China Petroleum Pipeline Engineering Company among its shareholders, has received formal expressions of interest to finance the project from three major banks, he said. These include Industrial and Commercial Bank of China, China Development Bank and China Construction Bank.
The pipeline still needs assurance from developers TotalEnergies and ExxonMobil that they’ll supply the pipeline’s feedstock, Agbley said. They will probably have to commit to an extra $1 billion to $2 billion on infrastructure to clean the gas before it flows into the pipeline, he said.
Construction is due to begin by 2024, to be ready for when TotalEnergies’s $20-billion natural gas export project starts two years later. However, that too may be delayed as the developer stopped work and evacuated its staff last March when insurgents affiliated with the Islamic State raided the closest town. It’s not clear when it will be safe enough for the project to resume.
For the pipeline, safety will be a “non-issue” because it will be buried underground, according to Agbley.